Petroleum Report: WTI Forges A New Kind of Parity

August 22, 2013 05:46 AM

The U.S. Energy Information Administration (EIA) reports disruptions to production in Iraq and Libya have had a significant effect over the summer, reducing crude supplies, particularly into the Mediterranean market, an important market for Brent-priced crude oils. In Iraq, persistent attacks on the pipeline from Kirkuk to Ceyhan in Turkey helped push total Iraqi production disruptions to about 290,000 bbl/d in July, up 60,000 bbl/d from June.

According to EIA, n Libya, ongoing labor-related protests at several oil production facilities boosted outages, thereby reducing production to 1.0 million bbl/d in July, down from 1.5 million bbl/d in April. Additional deterioration in the security environment in Iraq or Libya could further reduce OPEC production in the short term. In Nigeria, crude exports were reduced during July and August as deliveries of the country's Bonny Light grade were disrupted by work on key pipelines.supplydisrutpions8 22

Disruptions to global crude oil and liquid fuels production reached nearly 2.7 million barrels per day (bbl/d) in July 2013 (Figure 1), the highest level since at least January 2009. During this same period, global refinery crude oil runs reached their expected 2013 peak. Combined, these developments helped push Brent spot prices to an average of $108 per barrel in July, above the $102-$103-per-barrel average from April through June.

However, this upward price movement was likely muted in part by growing non-OPEC supply in other regions, including growing U.S. production that has reduced U.S. imports of crude oil and in so doing released more barrels from global suppliers to other markets, EIA said.

Crude Oil --

October 2013 WTI crude oil opened today at $103.86 and is still in tune with Brent's chart movements, following technical peaks and valleys. However, while maintaining parity in chart movement, WTI has widened the crude price spread strongly over the week, and we may see $100.00 WTI by the end of next week.

Movements between downtrending spikes since the beginning of the week have been 26 cents Monday to Tuesday, then 50 cents Tuesday to Wednesday, and 7 cents Wednesday to today for Brent crude. Measuring off the same spikes, in the same chart moves, WTI fell 75 cents, then 76 cents and 48 cents into today. This looks like a new form of parity. One in which chart moves are in tune, but the spread is much wider.crstuss8 22

U.S. crude inventories softened 1.4 million barrels to 359.1 million barrels -- now just 1.7 million barrels behind year-ago.

October 13 Brent crude oil futures opened today at $109.60 and topped $110.00 before trailing in line with downtrending resistance.

Currently, the WTI/Brent crude spread stands at $5.61 with Brent on top -- $2.44 cents wider than the same time last week. The techinicals show WTI and Brent spiking at the same time as each marks downtrending resistance. But WTI has far outpaced Brent in the downward trend. This suggests the two respond to the same technical stimuli.

Fuels --

According to EIA,The U.S. average retail price of regular gasoline decreased one cent to $3.55 per gallon as of August 19, 2013, 19 cents lower than last year at this time. Prices decreased in all regions except the Midwest, where the price increased two cents to $3.50 per gallon. The largest decrease came on the West Coast, where the price fell six cents to $3.78 per gallon. The East and Gulf Coast prices both fell two cents, to $3.55 per gallon and $3.37 per gallon, respectively. Rounding out the regions, the Rocky Mountain price declined a penny to $3.64 per gallon.

The national average diesel fuel price increased less than one cent to remain at $3.90 per gallon, 13 cents lower than last year at this time. Prices increased one cent in both the Midwest and on the West Coast, to $3.87 per gallon and $4.06 per gallon, respectively. On the East Coast, diesel fuel remains at $3.91 per gallon, up less than a penny from last week, and the Gulf Coast price remains at $3.82 per gallon, down less than a penny from last week. Rounding out the regions, the Rocky Mountain price decreased one cent to $3.92 per gallon, according to EIA.

Farm Diesel moved 1/2 cent higher according to Inputs Monitor data to a regional average of $3.418/gallon with eight of the twelve states in our index unchanged. The highest price was recorded in the state of Illinois at $3.51, unchanged over last week, while Wisconsin captured the regionwide low at $3.23 -- up a penny on the week.

Propane --prstuss8 22

According to EIA, total U.S. inventories of propane rose slightly from last week to remain at 61.9 million barrels, but are 9.1 million barrels (12.8 percent) lower than the same period a year ago. Midwest inventories gained by 0.1 million barrels, while Rocky Mountain/West Coast and East Coast inventories increased slightly. Gulf Coast inventories decreased by 0.1 million barrels.

Propylene non-fuel-use inventories represented 4.7 percent of total propane inventories.

LP moved 2 1/2 cents higher in the Inputs Monitor disstuss8 22Index to $1.402. The lowest priced LP in our index is in North Dakota at $1.21 while the high mark is at $1.77 in Michigan. If you have yet to book fall dryer needs, check your local prices and consider topping off before prices move higher.

Distillate --

The national distillate supply firmed 0.9 million barrels to 129.4 -- 4.1 million barrels above year-ago.




Back to news


Spell Check

No comments have been posted to this News Article

Corn College TV Education Series


Get nearly 8 hours of educational video with Farm Journal's top agronomists. Produced in the field and neatly organized by topic, from spring prep to post-harvest. Order now!


Market Data provided by
Brought to you by Beyer