Petroleum Report: Propane Stocks Fall Hard as Distillate Gains Ground

December 11, 2013 10:33 AM

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According to EIA, "While West Texas Intermediate (WTI) crude oil has traded at a persistent discount to Dated Brent crude since late 2010, the near-parity between Light Louisiana Sweet (LLS) crude and Dated Brent has only recently changed. In July, as U.S. refiners processed near-record amounts of crude oil, the discount of WTI relative to Brent narrowed to an average of $3.26 for the month, the lowest since December 2010.

As the Brent-WTI spread began to widen again in September, the LLS price, which historically had closely tracked Brent, moved lower with WTI. From January through August, LLS prices averaged $1.45 per barrel more than Brent, but since the start of September, LLS prices averaged $7.14 less than Brent. The opening of a large LLS discount to Brent and the increasing convergence of LLS and WTI prices result from pipeline expansions and reversals that have reduced bottlenecks in the U.S. mid-continent, continuing growth in domestic light oil production, and a seasonal decline in crude oil runs at U.S. Gulf Coast refineries during October."

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Crude Oil --

January 2014 WTI crude oil opened this morning at $98.65. 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.crstuss

U.S. crude inventories fell 10.6 million barrels to 375.2 million barrels -- now 2.6 million barrels above year-ago.

January 2014 Brent crude oil futures opened today at $109.43 and rolled sideways to end the day slightly higher. Next support lies around $109.50 and $108.25. A move below those levels would suggest downside potential to $106.60. A violation of $12.95 would suggest upside potential to $114.00.

The WTI/Brent crude spread narrowed $5.26 on the week to $10.78 at the open, with Brent on top.

Home Heat --

  • Residential heating oil up 4 cents on the week to $3.96/gallon.
  • Wholesale heating oil slightly lower on the week at $3.14/gallon.
  • Residential propane up 6 cents to $2.62/gallon.
  • Wholesale propane up 12 cents to $1.52/gallon.

Fuels --

Gasoline slightly higher -- Diesel fuels slightly lower.

The U.S. average retail price of regular gasoline decreased less than one cent to remain at $3.27 per gallon as of December 9, 2013, eight cents lower than last year at this time. Prices increased one cent in the Midwest to $3.13 per gallon and less than one cent on the West Coast to remain at $3.48 per gallon. The largest decrease came in the Rocky Mountain region, where the price fell four cents to $3.08 per gallon. On the Gulf Coast the price was $3.10 per gallon, two cents lower than last week, and on the East Coast the price dropped a penny to $3.38 per gallon, according to EIA.

The national average diesel fuel price decreased less than one cent to remain at $3.88 per gallon, 11 cents lower than last year at this time. Prices increased less than one cent on the East Coast to remain at $3.91 per gallon, while decreasing one cent in all other regions of the nation.prstuss Prices were $3.87 per gallon, $3.77 per gallon, $3.85 per gallon, and $3.99 per gallon, in the Midwest, Gulf Coast, Rocky Mountains, and West Coast, respectively, according to EIA.

Farm Diesel firmed 3 cents on the week, currently at $3.425. This week's lowest farm diesel was reported again in the state of Wisconsin at $3.26/gallon with the high mark in North Dakota at $3.55.

Propane --

U.S. propane stocks fell by 1.7 million barrels to enddisstuss at 52.6 million barrels last week, 18.6 million barrels (26.1%) lower than a year ago. Midwest regional inventories dropped by 1.5 million barrels, and East Coast inventories decreased by 0.2 million barrels. Rocky Mountain/West Coast inventories decreased by 0.1 million barrels, while Gulf Coast inventories increased by 0.1 million barrels, according to EIA.

Propylene non-fuel-use inventories represented 5.8% of total propane inventories.

LP moved 2 cents higher in this week's Inputs Monitor Index to $1.77. The lowest priced LP in our index is shared by Kansas and Ohio, each at $1.59 while the high mark is at $2.11 in Michigan.

Distillate --

The national distillate supply added 4.5 million barrels to 118.1 -- now steady with year-ago.

Graphs and indicated text provided by EIA.


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