Petroleum Report: Heating Oil, LP, Gasoline & Diesel All Higher -- Farm Diesel Softens

January 3, 2014 08:53 AM

According to EIA, "U.S. crude oil production increased 1.0 million barrels per day (bbl/d) in 2013, marking the fifth consecutive year of growth in production that had previously been on a downward trajectory since 1985. Shifting production patterns and a continuing rise in emerging economies' share of global demand are changing the pattern of crude oil and refined products trade flows around the globe.

U.S. crude oil production rose to its highest level in 24 years, exceeding net imports of crude oil in several weeks for the first time in nearly two decades. Significant expansion of pipeline and railroad infrastructure facilitated movement of new production to refining centers and alleviated the existing bottleneck at Cushing, Oklahoma. With more light sweet crude able to flow directly from production regions to the coasts, U.S. imports of light sweet crude oil were largely displaced by new production from the Bakken, Permian, and Eagle Ford tight oil formations. As a result, U.S. Gulf Coast crude oil grades, which had previously traded near global price levels, fell to record discounts to international benchmarks in November and December.

North America dominated global liquid fuels production growth in 2013 (Figure 1), with production rising by 1.5 million bbl/d in the United States and Canada even as it fell by 0.8 million bbl/d in the rest of the world. While several countries outside of North America saw their production increase, widespread disruptions in several key member countries of the Organization of the Petroleum Exporting Countries (OPEC) and decisions made by other OPEC producers together brought the rest of world's total oil production down. The largest production growth outside of North America occurred in Russia, which added only 0.1 million bbl/d.

As the United States reduced imports, more crude oil became available to the global market, helping to offset significant supply disruptions elsewhere in the world and to stabilize prices (Figure 2). West Texas Intermediate (WTI) spot prices averaged $98 per barrel (bbl) for the year, up 4% from 2012 and the highest annual average since 2008. The Brent spot price averaged $109/bbl, down 3% from 2012," EIA said.

Crude Oil -- index

January 2014 WTI crude oil opened this morning at $95.21 and trailed lower through the day. Resistance lies at $98.68 and $103.34. A violation of those levels would make $105.00 bulls next target. Next support is at $92.06 and below that, $91.25. A violation of these levels would suggest downside potential to April 15's low at $85.61.

U.S. crude inventories fell 7.0 million barrels to 360.6 million barrels -- now 0.6 million barrels below year-ago.

January 2014 Brent crude oil futurescrstuss opened today at $107.92 and moved slightly lower through the day. Next support lies at $106.60. A move below those levels would suggest downside potential below $105.00. A violation of $109.78 would suggest upside potential to $112.95.

The WTI/Brent crude spread widened $1.49 on the week to $12.71 at the open, with Brent on top.

Home Heat --

  • Residential heating oil a nickel higher on the week to $4.04/gallon.
  • Wholesale heating 4 cents higher on the week atPicture6 $3.23/gallon.
  • Residential propane up 4 cents to $2.80/gallon.
  • Wholesale propane up 5 cents to $1.69/gallon.


Fuels --

Gasoline and highway diesel higher, farm diesel softens.

The U.S. average retail price of regular gasoline increased six cents to $3.33 per gallon as of December 30, 2013, three cents higher than last year at this time. Prices increased in all regions of the nation, with the largest increase coming in the Midwest, where the price was up 10 cents to $3.26 per gallon. On the Gulf Coast, the price was up six cents to $3.12 per gallon, and the Rocky Mountainprstuss price was up five cents to $3.10 per gallon. The West Coast price was $3.53 per gallon, four cents higher than last week, and the East Coast price rose three cents to $3.41 per gallon, according to EIA.

The national average diesel fuel price increased three cents to $3.90 per gallon, two cents lower than last year at this time. Prices increased in all regions of the nation, with the Midwest, Rocky Mountain, and West Coast prices all increasing four cents, to $3.89 per gallon, $3.89 per gallon, and $4.03 per gallon, respectively. The East Coast price was $3.94 per gallon and the Gulf Coast price wasPicture7 $3.79 per gallon, both two cents higher than last week, according to EIA.

Farm Diesel softened 2 1/2 cents on the week, currently at $3.34 1/2. This week's lowest farm diesel was reported in the state of Indiana at $2.78/gallon with the high mark in North and South Dakota at $3.55.


Propane --

U.S. propane stocks fell by 1.5 million barrels to end at 45.9 million barrels last week, 20.8 million barrels (31.2%) lower than a year ago. Midwest regional inventories dropped by 0.9 million barrels and Gulf Coast inventories decreased by 0.5 million barrels. Rocky Mountain/West Coast inventories decreased by 0.1 million barrels, and East Coast inventories were essentially unchanged.prstuss

Propylene non-fuel-use inventories represented 7.7% of total propane inventories, according to EIA.

LP moved 7 3/4 cents higher in this week's Inputs Monitor Index to $2.00 1/4/gallon. The lowest priced LP in our index is in Nebraska at $1.61 while the high mark is at $3.17 in Indiana.

Distillate --

The national distillate supply gained 5.0 million barrels to 119.1 -- now 4.8 million barrels behind year-ago.

Graphs and indicated text provided by EIA.


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