Gasoline refining margins have been negative during the month so it is not profitable to run refineries and convert oil to gasoline. The middle distillates spreads have also narrowed. At these margins, you cannot make money by refining in size for gasoline. You cannot grow out of this hole.
Overall cracks as measured by the 321 and they are still showing a gain. The problem is that with drivers not putting the petal to the metal, demand is way off. Inventories will rise with products until refining is curtailed. Gasoline is off 46% in the last 2 months. Heating oil is down lose to 39% and crude oil is off 43%.
The problem with oil pricing is often logistical, can you get product to where it needs to be or can you produce product in the right size. Hurricanes, bottlenecks, geopolitical risks all create logistical problems which lead to higher prices, but the logistics can have a way of moving in the opposite direction. If demand falls, supply cannot always respond quickly especially if production is determined by a cartel where members have strong funding needs.
Overall cracks as measured by the 321 and they are still showing a gain. The problem is that with drivers not putting the petal to the metal, demand is way off. Inventories will rise with products until refining is curtailed. Gasoline is off 46% in the last 2 months. Heating oil is down lose to 39% and crude oil is off 43%.
The problem with oil pricing is often logistical, can you get product to where it needs to be or can you produce product in the right size. Hurricanes, bottlenecks, geopolitical risks all create logistical problems which lead to higher prices, but the logistics can have a way of moving in the opposite direction. If demand falls, supply cannot always respond quickly especially if production is determined by a cartel where members have strong funding needs.
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