December 2013 noted the first time on record that petroleum exports exceeded 4 million barrels per day (bbl/d) in a single month. Total 2013 petroleum exports tallied a daily average of 350,000 bbl/d -- that's 11 percent higher than in 2012. Below are highlights from EIA...
- Average distillate fuel gross exports exceeded 1.1 million bbl/d in 2013, a 110,000-bbl/d increase over the 2012 level.
- Gasoline exports, which include finished gasoline and gasoline blending components, increased 45,000 bbl/d in 2013, averaging 550,000 bbl/d for the year. December gasoline exports set a monthly record of 770,000 bbl/d.
- Propane gross exports averaged 300,000 bbl/d in 2013, a 130,000-bbl/d increase over the 2012 level.
- Propane exports to Western Europe grew strongly on a percentage basis, more than doubling from 2012 levels to 55,000 bbl/d last year.
- Exports of petroleum products from the U.S. Gulf Coast to Africa, as well as Asia and Oceania, increased by 56,000 bbl/d (81%) and 97,000 bbl/d (44%), respectively, in 2013.
The rise in export demand comes as domestic petroleum consumption retreats and during months like November and December when gasoline consumption typically lags, exports provide a marketplace for U.S. product. However, increased LP exports have led to propane shortages this winter, and imported supplies of distillate and propane helped balance the national supply.
Given the spike in propane pricing this winter, a lot of folks have asked me what propane pricing will look like in July. With export demand finding U.S. petroleum products at an attractive price, it is hard to say what the impact of record setting exports will be on the domestic price of propane and distillates. Stocks of both are currently low, but that is on course with historical data, and this winter has been a bugger for home heat.
Last year, we tapped the low for propane in July around $1.30. Will we see that level again? Perhaps my farmer friends are too optimistic when they say, ..."it'll come down." Perhaps energy bulls overshoot the influence of global pricing on domestic propane pricing warning, ..."if propane gets hooked on the global price, we will all pay the global price."
Supply fluctuations are nothing new to propane and this week marks a hook in the inventory chart back toward the five-year average. Rebuilding stocks will be priority one in moderating the U.S. LP price -- and that for distillate as well.
At a Profit Briefing meeting last month, I was talking to a mentor of mine who has spent over 30 years in fertilizer and propane. I asked him where all of this would put LP prices in the Midwest in July 2014. He raised his hands and shrugged, "Who knows?"
Meanwhile, your Inputs Monitor notes a 97 cent decline in regional propane pricing to $2.78/gallon this week. We have watched wholesale propane step lower by the week, and now retail levels are falling in earnest as well. The chance for $1.30 propane in July is out there, but the influence of record petroleum exports and near record setting winter weather could easily conspire between now and summertime to hold LP pricing above $2.00 for the remainder of 2014.
Crude Oil --
April 2014 WTI crude oil opened this morning at $101.04 -- $1.55 below the same time last week. Earlier this week the contract moved higher on fears related to the situation in Ukraine to $105.22 but has fallen off as tensions are perceived to be easing. Next support is at$101.02 and $100.05 on its way back to $95.00. A move back above $105.12 would open the door to upside risk to $109 and the August high of $112.24.
U.S. crude inventories gained 1.4 million barrels to 363.8 million barrels -- now 17.5 million barrels below year-ago.
April 2014 Brent crude oil futures opened $4.65 below last week today at $104.52. Next support lies at $102.86 and a move below that level would clear the way to bears' target of $101.50. Tough resistance lies at $111.32 and $112.391 along the way to $116.50.
The WTI/Brent crude spread narrowed $3.34 on the week to $3.48 at the open, with Brent at a premium.
Home Heat --
- Residential heating oil 2 cents lower on the week to $4.23/gallon.
- Wholesale heating oil 3 cents lower on the week at $3.36/gallon.
- Residential propane softened another 18 cents to $3.30/gallon.
- Wholesale propane 33 cents lower to $1.51/gallon.
Highway Fuels --
Gasoline firms, highway diesel slightly softer.
"The U.S. average retail price of regular gasoline increased four cents to $3.48 per gallon as of March 3, 2014, 28 cents lower than last year at this time. The Rocky Mountain price was $3.39, up seven cents from last week. The Midwest and West Coast prices both gained six cents to $3.50 per gallon and $3.71 per gallon, respectively. On the Gulf Coast the price was $3.23 per gallon, two cents more than last week, and the East Coast price was a penny higher at $3.47 per gallon," according to EIA.
"The national average diesel fuel price was down less than a penny to remain at $4.02 per gallon, 11 cents lower than last year at this time. The Rocky Mountain price increased three cents to $3.98 per gallon and the East Coast price was a penny higher at $4.16 per gallon. On the West Coast, the price gained a fraction of a cent to remain at $4.04 per gallon. Prices on the Gulf Coast and in the Midwest both decreased one cent, to $3.79 per gallon and $4.02 per gallon, respectively," according to EIA.
Look for information and statistics on LP and Farm Diesel in our weekly 'Farm Fuels in Focus' report.
Graphs and indicated text provided by EIA.