He says that the U.S. is turning back to Persian Gulf crude because of a seismic shift in supply-and-demand patterns. The nation has evolved into a net exporter of petroleum products as domestic refiners are taking crude from wherever available and turning it into diesel, gasoline and other oil products for growing Latin American nations — and even Europe, which is suffering from refinery closings.
Valero Energy Corp., the nation's biggest refiner, said strong exports of gasoline and distillate fuel oil, such as diesel and heating oil, to Latin America and Europe have insulated the industry from weak domestic demand.
He says that the jump in Persian Gulf imports comes as Saudi Arabia, the world's largest oil exporter and the de facto OPEC leader, has cranked output up to 30-year highs, above 10 million barrels a day, to offset potential supply gaps from stricter sanctions on Iran, the second-biggest oil supplier in the Organization of Petroleum Exporting Countries. The U.S. hasn't imported Iranian crude since the revolution, but that 25-year gap doesn't insulate the nation from gyrations in global oil prices.
RBOB futures went on a wild ride as a report of a refinery explosion at Canada’s largest refinery had traders re-reading the weekly supply data and reminding them that despite all of the global turmoil, the environments, especially for gasoline, were rather bullish. First of all they reported that gasoline production decreased last week, averaging 8.9 million barrels per day. That led to a 500,000 barrel drop in supply, putting them at the lowest level since October of 2008. Yes, there is some seasonality in the decline, yet supply is still below normal.
We also saw that crude oil supply surprisingly fell. Crude oil imports averaged 7.6 million barrels per day last week, down by 2.3 million barrels per day from the previous week. Crude supply dropped over all by 2.4 million barrels compared to expectations for a build. Distillates also fell by 500,000 barrels. The EIA also reported that gasoline and diesel fuel prices fall for the first time in 12 weeks. They said that the average retail price of regular gasoline fell five cents last week to $3.83 per gallon. That is still 32 cents per gallon higher than last year at this time. Prices decreased in all regions of the nation except the Rocky Mountains, where the price was up less than a penny to remain at $3.77 per gallon. The West Coast price decreased less than a penny to remain at $4.07 per gallon. The largest decrease came in the Midwest, where the price is $3.81 per gallon, down eight cents from last week. The Gulf Coast price decreased six cents to $3.60 per gallon, while the East Coast price dropped a nickel to $3.83 per gallon.
The national average diesel fuel price decreased a nickel to $4.09 per gallon, 30 cents per gallon higher than last year at this time. The largest decrease came on the West Coast, where the price is down eight cents to $4.32 per gallon. The Midwest price decreased six cents to $4.02 per gallon. The prices in the East Coast, Gulf Coast, and Rocky Mountain regions all decreased three cents to $4.09 per gallon, $4.00 per gallon, and $4.23 per gallon, respectively.