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Petroleum industry

Crude Oil Markets Maintain Squeeze on Refining Margins

Strategic Insights

— 1 min read

The crude oil market kept pace with a strong advance in gasoline prices, maintaining a squeeze on refining margins. This squeeze may force further reductions in refinery runs, lowering demand for crude. The West Texas Intermediate (WTI) and North Sea Brent futures rose 29 cents and 27 cents to $18.03/bbl and $16.39/bbl, respectively. The WTI-Brent spread widened to $1.64/bbl, while position squaring ahead of holidays may have contributed to the market's sharp rise. Spot markets for North Sea crude remained weak, with Dated Brent at a 15 cents discount to futures.

Key Takeaways:

  • The crude oil market rose 29 cents to $18.03/bbl for WTI futures and 27 cents to $16.39/bbl for North Sea Brent futures.
  • The WTI-Brent spread widened to $1.64/bbl, indicating a potential shortage of Brent crude.
  • Refineries may be forced to reduce runs due to low refining margins, potentially lowering demand for crude oil.
  • The U.N. Security Council is drawing up a resolution to allow Turkey to obtain 24 million bbl of crude oil through flushing of the idle pipeline from Iraq to the Mediterranean.
  • This will divert 250,000 b/d of Saudi Arabian and Russian crude oil to alternative markets, potentially exerting downward pressure on world crude markets.
  • The 3-2-1 crack spread dipped 1 cents to $3.36/bbl, indicating some refineries may be operating at a loss.
  • June No. 2 heating oil futures rose 0.56 cents to 48.38 cents/gallon, while July natural gas futures slipped 2 cents to $1.842/MMBtu.
  • Spot supplies at the Louisiana Gulf Coast were in the range of $1.75- $1.80/MMBtu, and there was no significant change in wholesale refined products markets.

Statistics:

  • WTI crude oil futures for July delivery rose 29 cents to $18.03/bbl.
  • North Sea Brent futures for July delivery gained 27 cents to $16.39/bbl.
  • The WTI-Brent spread widened to $1.64/bbl.
  • The 3-2-1 crack spread dipped 1 cents to $3.36/bbl.
  • June No. 2 heating oil futures rose 0.56 cents to 48.38 cents/gallon.
  • July natural gas futures slipped 2 cents to $1.842/MMBtu.

Sources:

  • [Source 1] Reuters: Crude Oil Rises as Gasoline Prices Climb
  • [Source 2] The Oil Daily: Wholesale Refined Products Markets Report
  • [Source 3] United Nations Security Council: Draft Resolution on Turkey's Crude Oil Pipeline

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