Natural gas soars as gas exports are probably going to happen a lot faster than many thought and pain at the pump is back as refinery woes mess up the trend of lower prices. On Friday, Reuters News reported "The Obama administration opened the door to a new era of U.S. energy exports on Friday, approving the first natural gas project since the start of a heated debate over how best to benefit from the shale energy boom.”
The USA Today reports that ”U.S. public concern over a European probe into possible oil price manipulation escalated Friday as the head of the Senate Committee on Energy and Natural Resources urged the Justice Department to join the investigation. The request from Sen. Ron Wyden, D-Ore., came after European Union investigators this week raided the offices of global energy giants BP, Royal Dutch Shell and Statoil. The anti-trust probe is examining whether the companies manipulated oil prices by making false reports to Platts, an energy industry data service owned by McGraw Hill Financial.”
Oil prices still look poised to test the lower end of the trading range below $90. RBOB looks to have a bit more upside but without another refining issue the next pop should be sold to anticipate a drop. Diesel of the other hand should stay strong as planting demand remains high.
As well as demand from Saudi Arabia, Reuters reports that “Saudi Arabia will import near record high diesel volumes this summer, as it gears up to beat the sweltering heat and meet rising travel needs during the Muslim fasting month of Ramadan, trade sources said. State oil giant Saudi Aramco will import up to 8.9 million barrels of diesel in June, up from an estimated 6.7m to 7.5m barrels in May, according to the sources, who expect at least the same volume or higher to be booked for July.
Top oil exporter Saudi Arabia shipped in record diesel volumes of 8.99m barrels in July, 2011, up from 8.13m in June that year, government data published from 2002 through the Joint Organizations Data Initiative showed. "I think this year, the July 2011 number might be surpassed as Saudi's diesel demand is growing every year and their new refinery is not expected at least until later this year,” a Gulf-based trader said. Higher overseas purchases by Saudi Arabia should help boost spot premiums and support weak Asian gasoil margins as Aramco imports from countries such as India and Singapore. Aramco relies heavily on imported diesel in summer when demand for electricity peaks with rising use of air conditioning as temperatures soar to a grilling 50 degrees Celsius. To cut its imports, Aramco has planned three new refineries. But the first of these, which will produce 176,000 barrels per day of diesel, comes online in the second half of 2013, instead of the second quarter as previously expected, traders said.
We should see oil supply rise again as refinery woes weigh. Oil should see an increase of 3 million barrels. A drop in gas of 2 million and distillates down 2.9, and those refinery runs should fall by 2.0.