Weekly Petroleum Report -- 2/15/2013

February 15, 2013 09:17 AM

Crude Oil --

WTI Crude futures moved higher to $98.00 at midweek but fell sharply today. March 2013 WTI Crude declines $1.36 on the day to $95.95 -- ranging today from $95.21 to $97.47.

According to EIA, "Cushing, Oklahoma has historically served as the mid-continent hub for distribution of both crude oil imported to the U.S. Gulf Coast and West Texas crude oil production. Pipelines were constructed and configured to move crude oil north to Cushing, and then on to refineries throughout the Midwest. However, as crude oil production has grown in the U.S. mid-continent and Canada, the Cushing hub has become over-supplied. As a result, market participants increasingly have been looking to relieve bottlenecks at Cushing by reconfiguring and expanding pipeline infrastructure to move crude oil south to the Gulf Coast refineries. Over the next two years, planned additions to pipeline takeaway capacity should be sufficient to ameliorate the current imbalance at the Cushing hub.

Over the past three years, 815,000 bbl/d of new pipeline capacity delivering crude oil to Cushing was added. Over the same period, only 400,000 bbl/d of new pipeline take-away capacity was added. During the next two years an additional 1,190,000 bbl/d of pipeline capacity for delivering crude oil from Canada and the midcontinent to Cushing is planned, but this is balanced by 1,150,000 bbl/d of planned pipeline capacity additions to deliver crude oil from Cushing to the Gulf Coast. In addition, about 830,000 bbl/d of new pipeline capacity is planned to move crude oil directly from the Permian Basin to the Gulf Coast, avoiding the congested Midwest. If this capacity is constructed and fully utilized, waterborne imports to the U.S. Gulf Coast, particularly of light sweet crude oil, could drop significantly."

Pipeline and other infrastructure updates will help the U.S. take advantage of rich supplies of crude and may help to lower the price of retail gasoline long-term.


Propane --

EIA reports U.S. propane stocks fell 2.5 million barrels to end at 52.4 million barrels last week, 6.0 million barrels -- 13% -- higher than a year ago. Gulf Coast inventories dropped by 1.0 million barrels, while Midwest regional inventories declined by 0.9 million barrels. East Coast stocks dropped by 0.4 million barrels, and stocks in the Rocky Mountain/West Coast region declined by 0.1 million barrels.

Propylene non-fuel-use inventories represented 5.7 percent of total propane inventories.

Retail propane upticked slightly again this week adding $0.004 to $2.482 -- still nearly 40 cents higher than year-ago.

Distillate --

Distillate supply fell 3.7 million barrels week-over -- shedding 17.8 million barrels year-over. The seasonal drawdown is in response to the snowstorm that excited East Coast demand for home heat.

Retail farm diesel pricing moved slightly higher over the report week showing gains for the second consecutive week. Farm diesel up $0.025 to $3.457 regionally -- highway diesel also up adding another eight cents nationally to $4.10 per gallon.




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