Weekly Petroleum Report -- 1/4/2013

January 4, 2013 09:40 AM

Crude Oil --

For the first time ever, Brent crude futures trading volumes surpassed WTI in April 2012. This is due to the fact that less crude is shipped out of Texas than in years past and the diminishing seaborn presence of WTI crude makes it less indicative of global pricing.

According to EIA, "Trading volume is one of the major determinants of how a specific commodity is weighted in the indexes that are used by many investors to include commodities in their investment portfolios. Index fund managers tend to shift investments to commodities with higher trading volumes. The S&P Goldman Sachs Commodity Index (GSCI) has increased its target weighting of Brent from 15.9 percent in 2011 to 22.3 percent in 2013, while dropping WTI from 32.6 to 24.7 percent. Similarly, the Dow Jones-UBS Commodity Index (DJUBS), which included Brent for the first time in 2012 with a 5.3-percent weighting, has increased the 2013 target weight to 5.8 percent."

All of that is to say that the United States is showing increasing signs of an energy disconnect from external sources. In another report, EIA revealed that in April of 2012, natural gas for electric power generation crossed-over coal-fired electricity for the first time. Moving forward, the report expects the trend toward natural gas-fired electricity to continue to eclipse the use of coal.

February 2013 crude ranging from 91.52-93.15 today -- currently 0.11 higher to 93.03.

Propane --

U.S. propane stocks fell 2.2 million barrels to end at 66.7 million barrels last week, 11.5 million barrels (21 percent) higher than a year ago. Gulf Coast regional inventories dropped by 1.5 million barrels, while Midwest inventories declined by 0.6 million barrels. Rocky Mountain/West Coast stocks dropped by 0.1 million barrels, and the East Coast region gained about 0.1 million barrels.

Propylene non-fuel-use inventories represented 5.6 percent of total propane inventories.

Distillate --

Distillate stocks increased over the report week adding 4.6 million barrels -- currently edging toward the low end of the five-year range -- 19.6 million barrels below year-ago levels. Recent climate projections for the East Coast have warmer weather moving in on the part of the country that uses the most heating oil. If fewer easterners reach for the thermostat, distillate supplies will continue to edge closer to the five-year on weaker demand.




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