Light sweet crude shot up well beyond $54 a barrel to $54.70 at one point today in to the highest prices in weeks as speculative fears rise about the low inventories of distillate fuels for the coming fourth quarter. Prices opened this morning at $52.30.
Brent crude from the North Sea also climbed over $2 a barrel opening at $51.12 and now well over $53. Gasoline prices also shot up to $1.55 a gallon from their opening of $1.48 a gallon. Experts expect to hear that inventories are lower when the Dept. of Energy report hits.
The Department of Energy addressed the issue a couple of weeks ago in their weekly energy update because distillate fuels are normally cyclic in their pricing. The prices go up in the winter, particularly as heating oil usage goes up. Not this year. The prices remain high for heating oil and diesel fuels alike. The primary reason for this is inventories haven’t been rebuilt from winter usage or really even before that.
These prices continue to climb despite OPEC’s insistence on maintain high levels of production, maintaining over 30 million bpd. These are the highest production levels in over two decades.
Refineries Remain Problematic
Refineries remain the weak point in this chain. Even though crude inventories dropped 1.6 million barrels in the in the U.S. report last week, crude oil was a 6 year high and most inventories world wide continue to swell. A new pipeline running from Azerbaijan to Georgia to Turkey came online last week and is expected to be pumping a million barrels a day by the fall. The Saudis have promised even more higher production levels as they continue to expand their capacity.
Refineries remain the problem. Right now the U.S. imports a fair amount of gasoline and the refineries continue to have problems almost across the board. The refineries are running at about 95% capacity and talk of climbing higher.
Royal Dutch/Shell is the current producer having refinery problems as they have two reformers in start mode at the Deer Park, TX facility but they certainly aren’t the only ones. Sunoco had reformer problems at their Pennsylvania facility a few weeks ago and the Conoco/Phillips facility has had problems for several weeks this year adding the bottleneck the U.S. has surrounding the production of crude oil into gasoline and distillate fuels.
Pump prices listed by GasPriceWatch.com list the national average at $2.07 with the low in Sikeston MO at $1.79. Right now it’s a wait-and-see until the Dept of Energy report hits tomorrow.
John Stith is a staff writer for murdok covering technology and business.
