Hey, nobody leave! This party is not over! Fed official wanted to make it clear that while Fed Chairman Ben Bernanke may have said we are getting closer to "last call" there is going to be plenty of punch to keep the party going. New York Fed chief Bill Dudley led the chorus of Fed officials that its party on and that helped bring down those rising bond yields and brought back oil and products despite tons of supply. In Fact Mr. Dudley went as far as saying that the Fed normally is overly optimistic on its economic projections, so what is everybody so worried about? So forget that puking gold, deflation is still a risk and the party is not over even if one commodity seems like it had too much to drink. The market’s "out of sync" and the market over reacted to the Chairman's comments, and there may be even more punch later on if needed. So party hardy like the train load of Chicago Blackhawk fans I was with on the train in this morning! If the Fed could bottle that enthusiasm we could power the economy for a generation.
The stock market is acting like the party is just getting started. That is bringing oil up; who you know always loves a good party. Forget that over supply and weak demand, a party is a party — so party on dude.
Distillate demand and gas oil in Europe seems to be supportive as stronger than expected. Asian demand may play into the stock market mania. More QE may also calm emerging markets that seem more dependent on the Fed than the United States at times.
I got a lot of reaction on my piece about Midwest gas prices. Good news today for the Midwest, both the Citgo and the Whiting Indiana crude unit is back online. Barbara J. Powell of Bloomberg reported that BP Plc has begun starting the converted crude unit at its Whiting, Indiana, plant, which will allow the largest U.S. Midwest refinery to process mostly heavy crude from Canada. Scott Dean, a BP spokesman in Warrenville, Illinois, said in an interview today that the crude unit remains on schedule to be brought online by month's end. The 250,000-barrel-a-day crude unit and a new delayed coker will allow Whiting to process as much as 85% heavy Canadian crude from about 20%, according to the company's website. "We are in the process of starting up and we expect to continue the starting up and to bring it online in the second quarter," Dean said. The six-drum 102,000-barrel-a-day delayed coker and a gasoil hydrotreater will support the crude unit at the 420,000-barrel-a-day Whiting refinery. The entire project is on schedule for completion in the second half of this year, Dean said. The new crude unit will initially process mostly light, sweet grades until related units like the delayed coker are completed and upgrades are made to existing units to maximize production, a person familiar with the project said on June 6, declining to be named because the information isn't public.
The Whiting unit's startup using light crude will help reduce supplies in Cushing, Oklahoma, the delivery point of domestic benchmark West Texas Intermediate, narrowing WTI's discount to North Sea Brent crude. As the crude conversion, which began in November, nears completion, the discount of WTI on the New York Mercantile Exchange to Brent on ICE Futures Europe has narrowed. The discount, based on August contracts, was $5.89 a barrel at 12:58 p.m., versus a 2013 high of $23.18 on Feb. 8. Cokers convert heavy refinery streams, such as vacuum residual fuel, into lighter products, while reducing much of the feedstock to solid petroleum coke."