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Net sales of crude oil (-18 million barrels) were offset by purchases of refined fuels (+18 million barrels), according to position records published by ICE Futures and the U.S. Commodity Futures Trading Commission. Funds held a net position of 249 million barrels in crude (5th percentile for all weeks since 2013) with long positions outnumbering shorts by a ratio of 2.35:1 (13th percentile). In refined fuels, however, funds held a net position of 36 million barrels (20th percentile) with longs outnumbering shorts by 1.40:1 (20th percentile). Funds held a position of 45 million barrels in gasoline (38th percentile) on May 16, with longs outnumbering shorts by 4.20:1 (50th percentile). U.S. NATURAL GASInvestors became slightly more bullish about the outlook for U.S. gas prices following evidence that low prices are starting to curtail drilling activity, which will gradually eliminate surplus production.

☆ U.S. refiners build new oil processing as travel rises
▼ + stars: | 2023-05-16 | by ( Erwin Seba | ) www.reuters.com time to read: +3 min

HOUSTON, May 16 (Reuters) - U.S. oil refiners aim to run at up to 94% of a total 17.9 million barrels per day processing capacity this quarter, according to company forecasts and analysts, driven in part by expectations of seasonal travel demand. This quarter is traditionally one of the year's hottest for demand as companies build gasoline and jet fuel output for the summer vacation season. He estimates refiners overall will run at 94% utilization rate this quarter, matching the 2017-19 average for the period. High prices will keep U.S. refinery utilization rates at levels near last year's about 91.7% this year and next, the U.S. Energy Information Administration forecast in January. Refiners will add the capacity to process an additional 328,000 bpd in this quarter, increasing gasoline and diesel supplies this summer.

Inventories of gasoline and diesel are particularly low for the time of year, which has kept prices firm even as crude prices have slipped back since the middle of April. Total inventories stood at 1,597 million barrels on May 5, which was -289 million barrels (-15% or -2.52 standard deviations) below the prior ten-year seasonal average. Commercial crude inventories remained close to the long-term average owing to the large-scale drawdown from the strategic reserve. Commercial crude stocks were +7 million barrels (+1% or +0.12 standard deviations) above the prior ten-year seasonal average on May 5. But the overall picture is one in which fuel inventories are low, supporting prices despite the deteriorating economic outlook.

As a result, the combined position had been reduced to just 302 million barrels (7th percentile for all weeks since 2013) on May 2 from 534 million barrels (38th percentile) on April 18. The position has essentially returned to where it was on March 21 (289 million barrels, 2.16:1) before OPEC⁺ surprised investors by announcing production cuts on April 2 totalling more than 1 million barrels per day. Chartbook: Oil and gas positionsThe most recent week saw sales across the board in Brent (-69 million barrels), NYMEX and ICE WTI (-37 million), European gas oil (-24 million), U.S. diesel (-11 million) and U.S. gasoline (-4 million). Fund managers had become especially bearish on middle distillates such as diesel and gas oil, the most exposed to the business cycle. Funds sold the equivalent of 71 billion cubic feet over the seven days ending on May 2, after selling 99 billion cubic feet the week before.

☆ Refiners Have a Lot Riding on Summer Driving Season
▼ + stars: | 2023-05-04 | by ( Jinjoo Lee | ) www.wsj.com time to read: 1 min

Marathon Petroleum sees weakening margins in Asia and Europe as a bullish sign for U.S. crack spreads. Photo: David Ryder/Bloomberg NewsThe business of turning crude oil into fuel is still very lucrative for U.S. refiners, but recent declines in pump prices and refiner profitability elsewhere are casting a cloud over their outlook. The plunge has been especially notable for distillates, which are used for diesel and jet fuel. Ultralow sulfur diesel is roughly $2.21 a gallon in New York Harbor, down 33% year to date. Distillate cracks on the Gulf Coast—the spread between the price of crude oil and the price of distillate product—have declined to $18.41 a barrel, down 70% year to date.

LONDON, May 4 (Reuters) - U.S. manufacturing and freight activity has declined for six months running, which is being reflected in falling consumption of diesel and other distillate fuel oils as well as industrial electricity sales. The index has fallen to levels that have coincided with a significant mid-cycle downturn in industrial activity or a cycle-ending recession in the past. Chartbook: U.S. diesel and electricity useBecause manufacturing output is closely correlated with consumption of distillate fuel oils and industrial electricity use, the downturn is filtering through into significant reductions in energy consumption. Between November and January, industrial electricity sales were down by an average of 3% compared with a year earlier (12th percentile for all three-month periods since 1980). Related columns:- Hard-ish landing has already arrived for U.S. manufacturers (April 4, 2023)- U.S. diesel consumption falls as economy slows (March 1, 2023)John Kemp is a Reuters market analyst.

The combined position fell to 447 million barrels (23rd percentile for all weeks since 2013) down from 534 million barrels (38th percentile) seven days earlier. Funds sold the equivalent of 99 billion cubic feet over the seven days ending on April 25, after buying a net total of 1,287 billion cubic feet in the previous eight weeks. The position slipped to 12 billion cubic feet net short (31st percentile for all weeks since 2006) from 87 billion cubic feet net long (34th percentile) a week earlier. Stocks were 280 billion cubic feet (+16% or +0.61 standard deviations) above the prior ten-year seasonal average on April 21, up from a deficit of 263 billion cubic feet (-8% or -0.98 standard deviations) on Jan. 1. Related columns:- Oil market has absorbed surprise production cut by OPEC⁺ (April 26, 2023)- Oil buying slows amid renewed concerns about economy (April 24, 2023)- Oil prices stall as short-covering rally is completed (April 17, 2023)John Kemp is a Reuters market analyst.

The most recent week saw purchases of NYMEX and ICE WTI (+12 million), Brent (+8 million), U.S. gasoline (+2 million) and European gas oil (+1 million) but sales of U.S. diesel (-3 million). But in products, the long-short ratio has increased to only 2.69:1 (40th percentile) from 2.39:1 (38th percentile) on March 21. And in middle distillates, such as gas oil and ultra-low sulphur diesel, the ratio has actually fallen slightly to 1.70:1 (33rd percentile) from 1.78:1 (35th percentile). Even on the crude side, however, the end of the short-covering process has sapped oil prices of some of their upward short-term momentum. U.S. NATURAL GASInvestors are becoming cautiously more bullish on U.S. gas prices, anticipating prices have already dropped so low the balance of risks is tilted strongly towards the upside.

Distillate stocks stood at 112 million barrels on April 14, down from 122 million on March 3, according to the U.S. Energy Information Administration (“Weekly petroleum status report”, EIA, April 19). The recent run-down in inventories has partially reversed the previous accumulation, which had seen the deficit narrow from -31 million barrels (-22% or –2.05 standard deviations) on October 7. CYCLICAL SLOWDOWNThe broader picture is still that U.S. distillate consumption is falling in line with the slowdown in manufacturing and freight activity. For now, inventories are still well below the long-term average, ensuring prices, calendar spreads and cracks have remained elevated. Related columns:- Global diesel prices fall as economic slowdown intensifies (April 5, 2023)- U.S. diesel consumption falls as economy slows (March 1, 2023)- U.S. diesel stocks start the year critically low (February 2, 2023)John Kemp is a Reuters market analyst.

West Texas Intermediate U.S. crude fell 33 cents, also 0.4%, to $80.53 a barrel. In Europe, European Central Bank officials are also wary of inflation and suggesting interest rates must keep rising. Meanwhile, the economy of top crude oil importer China grew by a faster-than-expected 4.5% in the first quarter, while the country's oil refinery throughput rose to record levels in March, data showed. ,Adding more pressure on oil benchmarks is Asian refiners continuing to seize Russian crude in April. India and China have snapped up the vast majority of Russian oil so far in April at prices above the Western price cap of $60 per barrel, according to traders and Reuters calculations.

April 19 (Reuters) - Oil drifted lower on Wednesday as the market weighed potential interest rate hikes from the Federal Reserve that could slow growth and dampen oil consumption, offsetting falling U.S. inventories and strong Chinese economic data. The U.S. Federal Reserve likely has one more interest rate rise in store to fight inflation, Atlanta Fed President Raphael Bostic said on Tuesday. Meanwhile, the economy of top crude oil importer China grew by a faster-than-expected 4.5% in the first quarter, while the country's oil refinery throughput rose to record levels in March, data showed. ,Adding more pressure on the oil benchmarks is that Asian refiners continues to seize Russian crude in April. India and China have snapped up the vast majority of Russian oil so far in April at prices above the Western price cap of $60 per barrel, according to traders and Reuters calculations.

☆ Oil slips on economy worries, despite upbeat China data
▼ + stars: | 2023-04-18 | by ( Alex Lawler | ) www.reuters.com time to read: +2 min

Crude was also pressured by the Iraq federal government and Kurdistan Regional Government (KRG) taking a step towards a resumption in northern oil exports from the Turkish port of Ceyhan after they were halted last month. Brent crude fell by 18 cents, or 0.2%, to $84.58 a barrel by 1336 GMT, giving up early gains. "As things stand, it's all systems go in China, much to the relief of those betting on higher oil prices," said Stephen Brennock of oil broker PVM. But the prospect of another increase to U.S. interest rates, which has been supporting the U.S. dollar, remained a drag on sentiment. Analysts expect U.S. crude inventories to fall by about 2.5 million barrels and also forecast declines in gasoline and distillates.

☆ Oil prices steady as strong China data offsets US rate worries
▼ + stars: | 2023-04-18 | by ( Arathy Somasekhar | ) www.reuters.com time to read: +3 min

2 oil consumer China offset concerns that possible increases in U.S. interest rates could dampen growth in the top consuming country. China's economy grew by a faster-than-expected 4.5% in the first quarter while oil refinery throughput rose to record levels in March, data showed. The dollar eased on Tuesday after the upbeat China data. Most traders, however, believe that the recent crude price rally is in need of a correction, said Dennis Kissler, senior vice president of trading at BOK Financial. Crude prices posted gains for the last four weeks, a streak not seen since June 2022.

☆ Oil steady as market awaits China GDP data
▼ + stars: | 2023-04-17 | by ( Noah Browning | ) www.reuters.com time to read: +2 min

SINGAPORE, April 17 (Reuters) - Oil prices were steady on Monday as investors eyed Chinese economic data for signs of demand recovery in the world's second-largest oil consumer. Further tightening supplies, oil exports from northern Iraq to the Turkish port of Ceyhan remain at a standstill almost three weeks after an arbitration case ruled Ankara owed Baghdad compensation for unauthorised exports. "Weaker refinery margins remain a feature, with the weakness predominantly driven by middle distillates. Stronger crude prices will not be helping margins for refiners either," ING analysts said in a note. The greenback has been strengthening alongside interest rate hikes, making dollar-denominated oil more expensive for holders of other currencies.

☆ Oil prices stable as economic fears balance OPEC+ cuts, U.S. stock draw
▼ + stars: | 2023-04-05 | by ( Rowena Edwards | ) www.reuters.com time to read: +2 min

[1/2] Flames emerge from flare stacks at Nahr Bin Umar oil field, north of Basra, Iraq March 9, 2020. REUTERS/Essam Al-Sudani/File PhotoLONDON, April 5 (Reuters) - Oil prices were stable on Wednesday, as the market weighed gloomy economic prospects against expectations of U.S. crude inventory declines and OPEC's voluntary output cuts announcement. Bullish sentiment continued after voluntary cuts pledged by the Organization of Petroleum Exporting Countries and allies including Russia, a group known as OPEC+. However, weak manufacturing activity in the U.S. and China - the two biggest oil consumers - have capped oil oil price gains. Record Russian diesel flows to the Middle East in March, and the sluggish performance of middle distillates contracts have "acted acted as a brake on any attempt to push crude oil prices meaningfully higher," Varga said.

But manufacturers across the eurozone have reported business activity has been falling for nine months since June 2022 according to purchasing managers’ surveys. U.S. manufacturers have reported business activity has been falling for five months since November 2022 according to the Institute for Supply Management (ISM)’s purchasing survey. But the deficit had narrowed from 63 million barrels (-15% or -2.05 standard deviations) at the end of June 2022, according to data from Euroilstock. U.S. distillate fuel oil inventories were 18 million barrels (-14% or -1.08 standard deviations) below the prior 10-year seasonal average on March 31. In Singapore, distillate inventories have risen in 12 of the 15 most recent weeks by a total of 3 million barrels, according to data from Enterprise Singapore.

In the past twelve months, the oil market has absorbed the impact of Russia's invasion of Ukraine and the sanctions imposed in response by the United States, the European Union and their allies in Asia. As a result, benchmark oil prices have retreated by nearly 40% from their post-invasion high on March 8, 2022, after adjusting them for core inflation. Like all equilibria in the oil market, this one is likely to prove temporary and fragile - lasting until one or more of the risks around recession, inflation and China's post-pandemic rebound materialise or fade away. Conversely, if the global economy slides into a full-blown recession, inventories will rise and prices and spreads are likely to soften further. For the moment, however, the oil market has returned to balance less than twelve months after one of the largest shocks since the World War Two.

Nearly 80% of distillates are used in freight transport, manufacturing and construction, so fuel consumption is closely geared to the manufacturing and freight cycle. Growth in both manufacturing activity and distillate consumption peaked in the first half of 2021 as the economy rebounded after the first wave of the pandemic. Distillate consumption also fell below prior-year levels in six of the nine months between April and December 2022 as demand dropped. Slower consumption created some scope to stabilise depleted distillate inventories towards the end of 2022. Notwithstanding the impact of poor weather, growth seems to have been decelerating slightly since November, as oil prices and drilling rates have fallen.

Europe’s distillate stocks were -41 million barrels (-10% or -1.43 standard deviations) below the ten-year average at the end of January. Singapore’s distillate inventories were -3 million barrels (-30% or -1.53 standard deviations) below the ten-year average on February 19. At the end of the last three recessions, U.S. distillate fuel oil inventories stood at 151 million barrels (April 2020), 163 million barrels (June 2009) and 139 million barrels (November 2001). By contrast, inventories currently stand at just 122 million barrels, according to data from the U.S. Energy Information Administration (EIA). So far, there has been only modest progress in rebuilding distillate stocks and defanging the inflation threat.

As a result, research on business cycles moved in other directions, and policymakers increasingly aimed to eliminate cyclical instability altogether. Oil and gas cycles have been closely correlated with each other and with U.S. manufacturing activity. On average, troughs in oil prices occur within ±3 months of a turning point in U.S. manufacturing activity, while troughs in gas prices occur within ±4 months. Some softness in manufacturing activity as well as oil and gas prices should therefore be expected at this point. If the current slowdown proves to be a mid-cycle soft patch, gas and especially oil prices are likely to rise strongly later in 2023.

☆ Norfolk Southern has erased $5 billion in market value since the Ohio train derailment spilled toxic chemicals into East Palestine
▼ + stars: | 2023-02-17 | by ( Matthew Fox | ) www.businessinsider.com time to read: +4 min

Shares of Norfolk Southern have erased $5 billion in market value since the Ohio train derailment. On February 3, a Norfolk Southern train derailment released toxic chemicals in the community of East Palestine, Ohio. JPMorgan estimated Norfolk Southern will face costs related to the train derailment of as much as $50 million. Despite the efforts, investors have grown concerned about the potential costs Norfolk Southern will face in lawsuits and clean-up actions. So far, water tests have yet to show vinyl chloride entering the drinking water for residents in the East Palestine, Ohio area.

LONDON, Feb 16 (Reuters) - Resurgent passenger aviation following the coronavirus pandemic has created shortages of jet fuel, pushing up airlines’ operating costs and fares. U.S. jet fuel inventories stood at just 36.5 million barrels on Feb. 10, according to data from the U.S. Energy Information Administration (EIA). Chartbook: U.S. jet fuel inventoriesKerosene-type jet fuel is produced by similar refinery processes to diesel and other distillate fuel oils, but at higher quality specifications. But with shortages of both jet fuel and other middle distillates, the average price paid for jet fuel climbed to $3.37 per gallon ($142 per barrel) in 2022 up from $2.00 per gallon in 2019. With China lifting domestic and international travel restrictions, global consumption of jet fuel is set to rise sharply, which will stretch jet fuel supplies even further in 2023.

Manufacturing output for the three months from November 2022 through January 2023 was almost 1.8% lower than in the three months between March and May 2022. Chartbook: U.S. manufacturing productionThe weakness of manufacturing production is consistent with business surveys which have showed activity falling every month since November. Since inflation was running faster than this, however, the volume of new orders had likely fallen in real terms by several percentage points. Related columns:- Labour hoarding exaggerates strength of U.S. job market (Reuters, February 6, 2023)- U.S. manufacturing is in recession (Reuters, February 1, 2023)- Recession now or later? Unenviable alternatives for 2023 (Reuters, January 26, 2023)- U.S. manufacturing has probably entered recession (Reuters, January 19, 2023)John Kemp is a Reuters market analyst.

Feb 10 (Reuters) - U.S. diesel prices have dropped this month and could go lower, analysts said, an unexpected swoon that coincided with the start of a British and European Union ban on Russian fuel imports. Lower prices could ease inflation worries that have occupied investors. A relatively warm winter across the United States and Europe and lower commercial trucking activity lowered demand. “This week was supposed to be when diesel prices blew out to the moon, but that’s not close to what happened,” said Bob Yawger, director of energy futures at Mizuho. Diesel demand by truckers fell off at the end of this year as high inflation impacted U.S. demand for goods.

☆ U.S. crude stocks rise as production climbs to highest since April 2020
▼ + stars: | 2023-02-08 | by ( Arathy Somasekhar | ) www.reuters.com time to read: +2 min

HOUSTON, Feb 8 (Reuters) - U.S. crude oil stocks rose last week to their highest level since June 2021, helped by higher production, the Energy Information Administration said on Wednesday. Crude inventories (USOILC=ECI) rose by 2.4 million barrels in the week ended Feb. 3 to 455.1 million barrels, close to the 2.5 million-barrel rise that analysts expected in a Reuters poll. U.S. oil production rose 100,000 barrels to touch 12.3 million, its highest since April 2020. Crude stocks at the Cushing, Oklahoma, delivery hub (USOICC=ECI) rose by 1 million barrels in the last week while net U.S. crude imports (USOICI=ECI) rose by 367,000 barrels per day, the EIA said. U.S. gasoline stocks (USOILG=ECI) rose by 5 million barrels to 239.6 million barrels, the EIA said, far surpassing the 1.3 million barrel rise that analysts expected in a Reuters.

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