[Plantagenet]

Obama can claim credit for increases in production, while pointing out that increased production isn't going to fix the one thing consumers care about - cost

???????

We're in an oil and NG glut and prices have collapsed in the USA. Obviously increased production has reduced the cost of gasoline and NG

Cheers

[kublikhan]

low oil price + high gasoline demand = nice margins for the refiners. This is not always the case. Sometimes refiner margins get squeezed and their profits fall. Obviously they want to make as much hay while they can because the good times will not last forever.

AUGUST 7, 2015 - Gross inputs to U.S. refineries exceeded 17 million barrels per day (b/d) in each of the past four weeks, a level not previously reached since EIA began publishing weekly data in 1990. The record high gross inputs reflect both higher refinery capacity and higher utilization rates.

Lower crude oil prices and strong demand for petroleum products, primarily gasoline, both in the United States and globally, have led to favorable margins that encourage refinery investment and high refinery runs. Refinery margins are currently supported by high gasoline crack spreads that reached a peak of 66 cents per gallon (gal) on July 8, a level not reached since September 2008. Much of the refinery output is reaching global markets, as net exports are 19% higher this year through May.

U.S. refineries are running at record-high levels

Apr 6, 2016 - U.S. crude oil inventories unexpectedly fell from record highs last week as refineries continued to hike output and imports fell. The EIA report was "modestly supportive" with the jump in refinery runs and fall in imports. U.S. crude imports fell 446,000 barrels per day. Refinery crude runs, which have remained at record seasonal levels for most of this year thanks to unusually strong gasoline margins, rose by 199,000 bpd.

"For refiners, they see a market with strong demand for gasoline and decent profit margins. I expect they will begin ramping up in order to capture the sweet spot of high volume and high margins for as long as it lasts." U.S. gasoline demand over past four weeks was at 9.36 million, up 4.2 percent from a year ago.

refiners in overdrive

[kublikhan]

Thanks, that is just what I was searching for. So it appears that even with cheap diesel fuel the production rate is exceeding both exports and local consumption. That seems odd, why are the refineries working so hard when their is already an ample supply of both fuels? Perhaps they have empty fuel storage capacity but not much crude oil storage capacity, so by refining more now they are keeping their crude storage from hitting max?

We currently have a gasoline shortage. So refiners want to make as much gasoline(and naptha) as possible. However refining oil produces more than just gasoline. It also produces diesel(plus an assortment of other refined products). Even though a glut is starting to build in diesel, the refiners have no choice but to add more diesel production if they want to continue to ramp up gasoline production. They can make some tweaks to the refineries to favor more gasoline over diesel, but these tweaks will only get you so far and you still will end up with a fair amount of diesel whether you want it or not. If they market won't consume it, into storage it goes. You can always sell it later when the glut begins to fade.

* Refiners tweak crude oil feedstocks to favour gasoline
* Gasoline refining margins shine as diesel languishes
* Strong demand for gasoline set to continue in 2016

After years of building up diesel production, European oil refiners are using every trick in the book to maximize gasoline output to meet unabated global demand as the two fuels stage a sharp reversal of fortune. Many operators on the continent, including Total, BP, Royal Dutch Shell and ExxonMobil, have invested hundreds of millions of dollars over the past decade to increase production of diesel, the road fuel of choice in the region, while seeking to lower gasoline output, seen as a mere "by-product" of that process until recently. But today the world faces a growing excess of diesel and spectacular demand in Asia and the United States for gasoline and naphtha, a feedstock for plastic manufacturing.

While oil refineries can not maintain high output of gasoline without also ramping up diesel production, they are now taking every possible step to tweak production in order to favour gasoline and naphtha. The results are already showing -- yields of middle distillates, which include gasoil and diesel, dropped to around 50 percent in December, date from industry monitor Euroilstock showed, the lowest in around 6 years.

Diesel cracks have languished due to rising global production, slower demand and a mild winter that has filled storage tanks to the brim. The global shortage in gasoline is expected to continue this year too.

Europe refiners rush to make more gasoline after diesel hangover

[ROCKMAN]

Sorry but the US has never gotten close to "energy independence" on a Btu basis or any other basis. In addition to still importing a very large % of our oil consumption we're still a NET IMPORTER of NG (though by very little today) and a NET IMPORTER of LNG last time I pulled the stat.

[Tanada]

Thanks, that is just what I was searching for. So it appears that even with cheap diesel fuel the production rate is exceeding both exports and local consumption. That seems odd, why are the refineries working so hard when their is already an ample supply of both fuels? Perhaps they have empty fuel storage capacity but not much crude oil storage capacity, so by refining more now they are keeping their crude storage from hitting max?

We currently have a gasoline shortage. So refiners want to make as much gasoline(and naptha) as possible. However refining oil produces more than just gasoline. It also produces diesel(plus an assortment of other refined products). Even though a glut is starting to build in diesel, the refiners have no choice but to add more diesel production if they want to continue to ramp up gasoline production. They can make some tweaks to the refineries to favor more gasoline over diesel, but these tweaks will only get you so far and you still will end up with a fair amount of diesel whether you want it or not. If they market won't consume it, into storage it goes. You can always sell it later when the glut begins to fade.

* Refiners tweak crude oil feedstocks to favour gasoline
* Gasoline refining margins shine as diesel languishes
* Strong demand for gasoline set to continue in 2016

After years of building up diesel production, European oil refiners are using every trick in the book to maximize gasoline output to meet unabated global demand as the two fuels stage a sharp reversal of fortune. Many operators on the continent, including Total, BP, Royal Dutch Shell and ExxonMobil, have invested hundreds of millions of dollars over the past decade to increase production of diesel, the road fuel of choice in the region, while seeking to lower gasoline output, seen as a mere "by-product" of that process until recently. But today the world faces a growing excess of diesel and spectacular demand in Asia and the United States for gasoline and naphtha, a feedstock for plastic manufacturing.

While oil refineries can not maintain high output of gasoline without also ramping up diesel production, they are now taking every possible step to tweak production in order to favour gasoline and naphtha. The results are already showing -- yields of middle distillates, which include gasoil and diesel, dropped to around 50 percent in December, date from industry monitor Euroilstock showed, the lowest in around 6 years.

Diesel cracks have languished due to rising global production, slower demand and a mild winter that has filled storage tanks to the brim. The global shortage in gasoline is expected to continue this year too.

Europe refiners rush to make more gasoline after diesel hangover

Did you somehow miss the graph I posted a few messages ago? EIA says the USA has a big seasonal surplus of both Gasoline and Diesel fuels.

[kublikhan]

Did you somehow miss the graph I posted a few messages ago? EIA says the USA has a big seasonal surplus of both Gasoline and Diesel fuels.

Your graph is showing gasoline stocks as above average but declining and projected to continue to decline for several more months.

The EIA (U.S. Energy Information Administration) released its weekly petroleum report on May 11, 2016. It reported that US gasoline inventories fell by 1.2 MMbbls. Market surveys estimated that gasoline inventories would fall by 0.71 MMbbls during the same period. The larger-than-expected decline supported gasoline prices.

Impact of the gasoline inventory
The rise in gasoline demand and exports led to the decline in US gasoline inventory. High gasoline prices benefit US refiners.

US Gasoline Inventories Resume Their Downward Trend

Also look at the global picture, not just the US. Rising gasoline demand in Asia is causing the gasoline market to tighten up and margins to rise. Globally there is tightness in the gasoline market. Check out what the IEA says:

demand will profit from growing gasoline consumption particularly in India and China, the International Energy Agency said on Thursday. Any changes to our current 2016 global demand outlook are now more likely to be upwards than downwards, as gasoline demand grows strongly in nearly every key market, more than offsetting weakness in middle distillates

Outlook for oil brightens as output disruptions erode surplus: IEA

[kublikhan]

Looks like the party may be ending for gasoline. One of the few global bright spots in refined oil products joins diesel in oversupply. Demand is still up, but supply is up more. This was the scene from a few months ago:

Mar 3, 2016 - Cheap oil and strong car sales are driving demand growth for gasoline across Asia, threatening to open up the region's first shortage for the motor fuel in more than 15 years. That is expected to open an average annual deficit this year in Asia of 10,000 barrels per day (bpd) of gasoline that could widen to 90,000 barrels bpd by 2017. A tightening gasoline market would coincide with an expected late 2016 to early 2017 puncture of a global crude glut, lending support to a recovery in oil prices that are still down nearly 70 percent from mid-2014 levels.

FGE expects the gasoline supply gap to widen to 160,000 bpd in 2018. Consultancy JBC Energy sees a smaller shortfall of 107,000 bpd in 2018, up from 71,000 bpd next year. Although analysts expect China's car sales to slow in 2017 as the auto tax break expires, the increased sales from past years and strong sales in India are still expected to push up gasoline demand and profit margins for the fuel.

Asia to see first gasoline squeeze in more than 15 years

And from yesterday:

May 13, 2016 - Asia's refined product markets are being swamped by a wave of gasoline as a long-lasting crude oil glut spills into the one fuel market refiners had hoped would save them, ruining margins and dragging down share prices across the region.

With gasoline's slump, overall refining margins in Singapore have dropped nearly 60 percent since the beginning of the year, buckling under the weight of the fuel products pumped out of oil plants as refiners feasted on crude prices that were as low as three-quarters of their mid-2014 levels. "We don't expect 2016 refining margins to improve. In fact, the situation could worsen from second-half of 2016 as the peak maintenance season in Asia will be over."

In a sign of just how bloated the market has become, Singapore's light distillate stocks, which includes gasoline, hit nearly 16 million barrels late last month, the highest on record, according to government figures. The stocks have dropped back since, but there's still enough gasoline in the tanks to fill up almost 50 million average-sized vehicles. Lin said some of the main contributors to the gasoline glut have been private Chinese refiners, known as "teapots", that have started exporting their surplus petrol, overwhelming demand.

The collapsing margins are a sharp reversal from expectations of a few months ago. Just in February South Korea's SK Innovation, a major Asian refiner, said its margins would remain strong as demand for gasoline and naphtha offset weaker markets for other fuels.

This was a signal for refiners to ramp up operating rates across Asia to profit from still strong demand for fuel, especially from China and India. "That caused global oversupply and refining margins to tumble as demand couldn't (keep) supporting the increasing supply"

Refiners struggle to stay afloat as Asia drowns in gasoline

China processed record crude on a daily basis in April as the nation’s independent plants boosted operations amid a surge in oil imports. Crude refining in the world’s second-largest oil consumer increased 2.4 percent from a year. “Teapot refineries have raised operation rates significantly this year. This has resulted in much higher oil processing than we expected in recent months.”

China Processes Record Crude on Boost From Independent Refiners

That EIA graph on gasoline inventories projected levels normalizing later this year. With all of this unexpected production coming online from the teapot refiners I wonder if that will actually be the case. Inventories may instead stay elevated.

[ROCKMAN]

T - Not saying your impression is wrong but one needs to distinguish between an increase in stocks as due to a lack of sales or an increase due to an anticipated increase in demand. Given low prices and the summer driving season is coming up maybe the refineries are building above average stocks because the expect above average demand. Or not. We'll just have to see how it all shakes out by the end of the summer.

[AdamB]

Sorry but the US has never gotten close to "energy independence" on a Btu basis or any other basis.

But getting better Rock. More than a 50% reduction of dependence....you increasing production willy nilly, the US being the Saudi Arabia of coal, and recently of natural gas as well.




Take that chart and stare at it closely...these guys did...and drew the next obvious conclusion.

http://money.cnn.com/2015/04/15/investi ... ependence/

Just as you once hypothesized that price would rock the peak oil world, and Mr reserve hypothesized that the shale and tight oil and gas would be the thing that price would unleash upon an unsuspecting planet, those CNN boys are thinking along some lines that look not only reasonable, but have a far higher level of probability than any of us previously suspected.

In addition to still importing a very large % of our oil consumption we're still a NET IMPORTER of NG (though by very little today) and a NET IMPORTER of LNG last time I pulled the stat.

I think we produce 91% of the BTUs we use domestically, no matter how you slice the form of those BTUs. 91% is far better than it once was, as the chart above shows, we have been ROCKING the energy independence meme.

[ROCKMAN]

Adam - Good poop...thanks. But now we have low oil prices/much less US drilling in the once booming trends where production is declining. And happening while consumption appear to be heading up even if slowly. That would seem to imply that when we see the net energy import chart in 5 years that tend may have reversed itself

[AdamB]

Adam - Good poop...thanks. But now we have low oil prices/much less US drilling in the once booming trends where production is declining.

Yup. But that wasn't the point I addressed. I addressed the point of inability to achieve energy independence, on any basis as you said, and it turns out that we are at about a 91% production versus consumption level, which is far better than it once was, as the evidence demonstrates. And just as obviously, reporter types noticed and drew the obvious conclusion...for reporter types anyway.

And production is only one variable in two variable equation...as demand profiles change, as they have in the past decade, via the mechanisms that you call POD and I call something far more common (shifting supply and demand curves), then real live energy experts begin putting together scenarios that suddenly make those demand changes important, and by extension all of this effects independence potential. Here is said expert.

https://www.weforum.org/agenda/2016/04/ ... oil-peaks/

Obviously she is suspect if only because the likes of Matt Savinar graduated from the school she teaches at, but I'm sure her's isn't the only idea on these lines.

And happening while consumption appear to be heading up even if slowly. That would seem to imply that when we see the net energy import chart in 5 years that tend may have reversed itself

It certainly might. or it might not. Your industry has increased volumes so much, and so fast, that the next obvious question that anyone must answer...prior to pretending we know enough to discuss the future...at what price will the same process activate again, and once activated, how long will it continue? The only people with the resources and manpower and expertise to tackle that issue are about ready to release their AEO 2016 report, but so far we just have the early release. haven't been able to go through it yet and see what the experts think, it just came out today.

http://www.eia.gov/forecasts/aeo/er/index.cfm