WEEKLY REFINING INDICATORS REPORT WEEK ENDING 10/10/2014 October 16, 2014
October 16, 2014 Blake Fernandez504.582.2528 [email protected] WEEKLY REFINING INDICATORS REPORT Leonard Raymond504.582.2884 [email protected] WEEK ENDING 10/10/2014 Quick Take: Higher imports along with another reduction to refining utilization levels are the main contributors for the larger than expected crude build this week. From a regional standpoint, Gulf Coast stocks are now up to 190.4MMBbls representing a 5.3MMBbl increase week over week. On the demand front, gasoline is down 0.5% and distillate is up 0.7% on a Y/Y trailing 4-week basis. • • • Trailing 4-week average crude throughput is 3.3% above the year-ago comp. We estimate October demand cover of 23.3 days (October ‘13 = 25.4 days, October 09-13 avg. = 24.7). Trailing 4-week average gasoline demand is 0.5% below the year-ago comp. We estimate October demand cover of 23.6 days (October ‘13 = 23.9 days, October 09 -13 avg. = 23.6). Trailing 4-week average distillate demand is 0.7% above the year-ago comp. We estimate October demand cover of 33.3 days (October ‘13 = 31.5 days, October 09-13 avg. = 37.8). Days of Crude Demand Cover 27x 25x 23x 21x Jan May 5-yr Avg. Jul Sep Nov 2013 2014 Days of Gasoline Demand Cover 29x 27x 25x 23x 21x Jan • Mar Trailing 4-week average total product demand is 1.6% above the year-ago comp. We estimate October demand cover of 59.0 days (October ‘13 = 58.2 days, October 09-13 avg. = 58.4). Mar May Jul 5-yr Avg. Sep Nov 2013 2014 Days of Distillate Demand Cover 55x 48x 41x 34x 27x 20x Jan Mar May 5-yr Avg. Jul Sep 2013 Nov 2014 Days of Total Product Demand Cover 65x 60x 55x 50x Jan Mar May 5-yr Avg. Jul 2013 Sep Nov 2014 Information and sources for all charts and tables in this report were compiled from Howard Weil, EIA and Bloomberg. Howard Weil is a division of Scotia Capital (USA) Inc., a member of the Scotiabank group, and represents Scotiabank’s energy equities business in the United States. All relevant disclosures and certifications begin on Page 12 of this report. Howard Weil | Scotia Capital (USA), Inc. 1100 Poydras Street, Suite 3500 New Orleans, LA 70163 Page 1 of 12 Weekly Refining Indicators Report DOE Inventories & Imports (000s) TOTAL U.S. Current Year-ago % Change 5-Yr. Average % Change Inventories Crude 370,573 374,538 -1% 355,125 4% Total Gasoline (includes RFG + blendstock) 205,673 217,309 -5% 209,839 -2% Total Distillate (Diesel + #2 Heating Oil) 124,622 124,237 0% 146,673 -15% 14,256 110,366 18,614 105,623 -23% 4% 37,863 108,810 -62% 1% 7,740 8,004 -3% 8,321 Total Gasoline (includes RFG + blendstock) 428 584 -27% 608 -30% Total Distillate (Diesel + #2 Heating Oil) 145 67 116% 113 29% 15,321 14,853 # 2 Heating Oil Diesel Imports Crude Crude Throughput Refinery Utilization 88.1% 86.2% 3% 2% 14,429 84.0% -7% 6% 5% REGIONAL INVENTORY Current Year-ago % Change 5-Yr. Average % Change PADD 1 (Northeast) Crude Total Gasoline (includes RFG + blendstock) RBOB (Alcohol) Total Distillate (Diesel + #2 Heating Oil) # 2 Heating Oil Diesel 11,482 11,127 3% 11,337 1% 52,331 57,070 -8% 53,356 -2% 15,526 18,234 -15% 16,249 43,074 39,218 10% 57,476 -25% 7,201 35,873 11,529 27,689 -38% 30% 29,844 27,632 -76% 30% 93,690 46,669 101,295 49,499 -8% 93,534 49,986 -7% -17% PADD 2 (Midwest) Crude Total Gasoline (includes RFG + blendstock) RBOB (Alcohol) Total Distillate (Diesel + #2 Heating Oil) -6% 0% 5,380 6,480 29,483 28,448 4% 29,026 6,443 2% 190,359 71,795 188,620 76,457 1% -6% 180,207 72,259 -1% PADD 3 (Gulf Coast) Crude Total Gasoline (includes RFG + blendstock) RBOB (Alcohol) 6% 10,178 11,138 -9% 11,411 Total Distillate (Diesel + #2 Heating Oil) 36,334 40,481 -10% 44,494 -18% Crude Total Gasoline (includes RFG + blendstock) 20,503 19,350 6% 17,192 19% 7,027 3,975 6,600 3,703 6% 6,436 3,153 26% Crude Total Gasoline (includes RFG + blendstock) 54,540 27,851 54,146 27,683 1% 52,855 27,802 3% 1% Total Distillate (Diesel + #2 Heating Oil) 11,755 12,387 -5% 12,525 -6% PADD 4 (Rockies) Total Distillate (Diesel + #2 Heating Oil) 7% 9% PADD 5 (West Coast) October 16, 2014 0% Page 2 of 12 Weekly Refining Indicators Report Demand vs. Supply Charts US Crude Demand (000 Bbl/d) US Crude Stocks (000 Bbls) 17,000 400,000 15,750 350,000 14,500 13,250 300,000 Jan Mar May '13 Jul '14 Sep Nov Jan Mar 5-yr Avg May Jul '13 Sep '14 Nov 5-yr Avg U.S. Gasoline Stocks (000 Bbls) U.S. Gasoline Demand (000 Bbl/d) 250,000 9,850 9,375 225,000 8,900 200,000 8,425 175,000 7,950 Jan Mar May Jul '13 '14 Sep Jan Nov Mar May Jul '13 5-yr Avg US Distillate Demand (000 Bbl/d) '14 Sep Nov 5-yr Avg US Distillate Stocks (000 Bbls) 4,450 180,000 160,000 4,000 140,000 3,550 120,000 3,100 100,000 Jan Mar May '13 Jul '14 Sep Nov Jan Mar 5-yr Avg May '13 US Total Product Demand (000 Bbl/d) 20,750 Jul '14 Sep Nov 5-yr Avg US Total Product Stocks (000 Bbls) 1,200,000 1,150,000 19,500 1,100,000 18,250 1,050,000 17,000 1,000,000 Jan Mar May '13 October 16, 2014 Jul '14 Sep 5-yr Avg Nov Jan Mar May '13 Jul '14 Sep Nov 5-yr Avg Page 3 of 12 Weekly Refining Indicators Report Regional Refinery Utilization US Total Refinery Utilization (%) PADD I Refinery Utilization (%) 95 100.0 90 90.0 85 80.0 80 70.0 75 60.0 Jan Feb Mar Apr May '13 Jun Jul '14 Aug Sep Oct Nov Dec Jan Feb 5-yr Avg Mar Apr May Jun Jul '10-'13 avg Aug Sep Oct Nov Dec '14 PADD III Refinery Utilization (%) PADD II Refinery Utilization (%) 101.0 100.0 91.0 90.0 81.0 80.0 71.0 70.0 60.0 61.0 Jan Feb Mar Apr May Jun Jul '10-'13 avg Aug Sep Oct Jan Feb Nov Dec Mar Apr May Jun Jul '10-'13 avg '14 Aug Sep Oct Nov Dec '14 PADD V Refinery Utilization (%) PADD IV Refinery Utilization (%) 101.0 100.0 91.0 90.0 81.0 80.0 71.0 70.0 60.0 61.0 Jan Feb Mar Apr May Jun Jul '10-'13 avg October 16, 2014 Aug Sep Oct '14 Nov Dec Jan Feb Mar Apr May Jun Jul '10-'13 avg Aug Sep Oct Nov Dec '14 Page 4 of 12 Weekly Refining Indicators Report Regional Crack Spreads East Coast 6-3-2-1 (Brent + Freight) Average: 4Q13 1Q14 2Q14 3Q14 QTD 14 $3.70 $8.39 $7.46 $8.75 $10.08 East Coast 6-3-2-1 $25.00 $20.00 $15.00 $10.00 $5.00 $0.00 5-yr Range Chicago 2-1-1 (WTI) Average: 4Q13 1Q14 2Q14 3Q14 $20.03 $21.18 $22.08 $20.55 QTD 14 $17.99 '13 '14 Chicago 2-1-1 $50.00 $40.00 $30.00 $20.00 $10.00 $0.00 5-yr Range Gulf Coast 3-2-1 (LLS) Average: 4Q13 1Q14 2Q14 3Q14 $9.47 $10.86 $14.05 $12.11 '13 '14 Gulf Coast 3-2-1 $25.00 $20.00 $15.00 QTD 14 $9.62 $10.00 $5.00 $0.00 ($5.00) 5-yr Range October 16, 2014 '13 '14 Page 5 of 12 Weekly Refining Indicators Report Regional Crack Spreads West Coast 5-3-2 (ANS cif W. Coast) Average: 4Q13 1Q14 2Q14 3Q14 $12.97 $14.00 $19.41 $16.85 QTD 14 $18.91 West Coast 5-3-2 $42.50 $34.00 $25.50 $17.00 $8.50 $0.00 5-yr Range NW Europe 2-1-1 (Brent) Average: 4Q13 1Q14 2Q14 3Q14 $8.30 $8.97 $11.54 $12.70 QTD 14 $13.09 '13 '14 NW Europe 2-1-1 $25.00 $20.00 $15.00 $10.00 $5.00 $0.00 5-yr Range Singapore 2-1-1 (Dubai) Average: 4Q13 1Q14 2Q14 3Q14 $11.43 $14.86 $13.88 $13.89 QTD 14 $13.02 '13 '14 Singapore 2-1-1 $30.00 $24.00 $18.00 $12.00 $6.00 $0.00 5-yr Range October 16, 2014 '13 '14 Page 6 of 12 Weekly Refining Indicators Report Crude Oil Differentials LLS - Maya LLS- Maya Average: 4Q13 1Q14 2Q14 3Q14 $11.59 $15.17 $9.76 $10.09 $24 $18 $12 QTD 14 $9.28 $6 $0 '13 $5.28 $3.73 $4.73 $3.70 QTD 14 $3.50 5-yr Avg LLS - Mars LLS - Mars Average: 4Q13 1Q14 2Q14 3Q14 '14 $12 $9 $6 $3 $0 ($3) '13 LLS - ANS Average: 4Q13 1Q14 2Q14 3Q14 ($4.08) ($1.52) ($4.05) ($1.24) '14 5-yr Avg LLS - ANS $15 $10 $5 $0 QTD 14 $2.08 ($5) ($10) ($15) '13 $3.61 $5.84 $2.41 $3.43 QTD 14 $2.88 5-yr Avg LLS - WTI LLS - WTI Average: 4Q13 1Q14 2Q14 3Q14 '14 $35 $28 $21 $14 $7 $0 ($7) '13 October 16, 2014 '14 5-yr Avg Page 7 of 12 Weekly Refining Indicators Report Crude Oil Differentials LLS - Brent LLS - Brent Average: 4Q13 1Q14 2Q14 3Q14 QTD 14 ($8.36) ($3.51) ($4.35) ($0.94) $0.16 $10 $5 $0 ($5) ($10) ($15) '13 QTD 14 $11.97 $9.35 $6.75 $4.37 $2.72 5-yr Avg Brent - WTI Brent - WTI Average: 4Q13 1Q14 2Q14 3Q14 '14 $32 $24 $16 $8 $0 ($8) '13 $3.85 $5.45 $7.35 $8.86 QTD 14 $5.45 5-yr Avg WTI-WTS WTI - WTS Average: 4Q13 1Q14 2Q14 3Q14 '14 $20 $15 $10 $5 $0 ($5) '13 QTD 14 $23.60 $12.95 $11.47 $10.81 $7.45 5-yr Avg Brent - Clearbrook (Bakken) Brent - Clearbrook (Bakken) Average: 4Q13 1Q14 2Q14 3Q14 '14 $50 $40 $30 $20 $10 $0 '13 October 16, 2014 '14 '10-'12 Avg Page 8 of 12 Weekly Refining Indicators Report CFTC: Non-Commercial Positions NYMEX WTI NYMEX WTI: Open Interest vs. Price Net Long (Short) Position 450,000 323,473 317,727 302,564 299,982 297,281 296,052 295,946 293,683 300,000 150,000 0 8/22/14 8/29/14 9/5/14 9/12/14 9/19/14 9/26/14 $120.00 1.75 $95.00 1.5 $70.00 1.25 $45.00 1 $20.00 2009 10/3/14 10/10/14 WTI ($/bbl) # of contracts 600,000 Oil Open Interest (MM Contracts) 2 1 contract = 1,000 barrels 2010 2011 2012 Open Interest NYMEX RBOB 2013 2014 WTI NYMEX #2 Heating Oil Net Long (Short) Position Net Long (Short) Position 1 contract = 42,000 gallons 1 contract = 42,000 gallons 100,000 5,000 75,000 0 2,332 1,545 50,171 50,000 41,668 41,377 40,453 35,048 37,456 43,322 34,686 25,000 # of contracts # of contracts 76 8/22/14 (5,000) 8/29/14 9/5/14 9/12/14 9/19/14 (2,575) (2,674) 9/26/14 10/3/14 10/10/14 (7,137) (10,000) (10,037) 0 8/22/14 8/29/14 October 16, 2014 9/5/14 9/12/14 9/19/14 9/26/14 10/3/14 10/10/14 (15,000) (13,887) Page 9 of 12 Weekly Refining Indicators Report Shipping Trans-Atlantic Arbitrage: CRUDE OIL Trans-Atlantic Arbitrage: GASOLINE WTI-Brent (Net of Freight) USAC-NWE (Net of Freight) 20.0 $3.00 $ per barrel $0.00 8/22/14 ($3.00) 8/29/14 9/5/14 ($2.83) 9/12/14 ($2.90) 9/19/14 9/26/14 ($0.55) 10/3/14 10/10/14 ($0.39) ($2.41) ($3.30) ($4.01) ($6.00) cents per gallon 17.5 15.0 10.0 7.7 7.5 3.9 5.0 1.9 ($5.62) 0.0 0.0 0.0 10/3/14 10/10/14 0.0 8/22/14 ($9.00) 8/29/14 9/5/14 9/12/14 9/19/14 9/26/14 Gulf Coast/Europe Arbitrage: ULSD Persian Gulf-USGC: Freight Rate (250' dirty tanker) USGC-NWE Trailing 8 weeks (Net of Freight) $1.20 3.0 1.1 0.0 0.0 0.0 0.0 0.0 0.0 0.0 8/22/14 8/29/14 9/5/14 9/12/14 9/19/14 9/26/14 0.0 10/3/14 10/10/14 $ per barrel cents per gallon $0.90 1.5 $0.79 $0.66 $0.66 $0.59 $0.60 $0.52 $0.52 $0.52 $0.46 $0.30 (1.5) $0.00 8/22/14 (3.0) 8/29/14 9/5/14 9/12/14 9/19/14 9/26/14 10/3/14 10/10/14 Total US Product Imports (000 Bbl/d) Total US Product Exports (000 Bbl/d) 4,000 4,000 3,500 3,500 3,000 3,000 2,500 2,500 2,000 2,000 1,500 1,500 1,000 1,000 1 4 7 10 13 16 19 22 25 28 31 34 37 40 43 46 49 52 5-yr Avg. '13 1 4 '14 7 10 13 16 19 22 25 28 31 34 37 40 43 46 49 52 5-yr Avg. '13 '14 Note: Arb spread estimates provided above represent absolute values: Positive # Arb profit on NWE-sourced cargoes imported to U.S. Negative # Arb profit (ignore +/- sign) on U.S.-sourced cargoes exported to NWE October 16, 2014 Page 10 of 12 Weekly Refining Indicators Report WTI BRENT NYMEX WTI: 12-Month Strip ICE Brent: 12-Month Strip 104 104 98 98 $ per barrel $ per barrel Energy Futures 92 86 80 CL2 CL3 9/19/2014 CL4 CL5 CL6 9/26/2014 CL7 CL8 CL9 CL10 CL11 CL12 10/3/2014 CO1 10/10/2014 CO2 CO3 9/19/2014 CO4 CO5 CO6 CO7 9/26/2014 CO8 RBOB NYMEX RBOB: 12-Month Strip ICE RBOB: 12-Month Strip 272 272 259 259 246 233 220 CO9 CO10 CO11 CO12 10/3/2014 RBOB ¢ per gallon ¢ per gallon 86 80 CL1 10/10/2014 246 233 220 XB1 XB2 XB3 9/19/2014 XB4 XB5 XB6 XB7 9/26/2014 XB8 XB9 XB10 XB11 XB12 10/3/2014 PG1 PG2 PG3 9/19/2014 10/10/2014 PG4 PG5 PG6 PG7 9/26/2014 PG8 PG9 PG10 PG11 PG12 10/3/2014 10/10/2014 #2 HEATING OIL GASOIL NYMEX #2 Oil: 12-Month Strip ICE Gasoil: 12-Month Strip 280 280 270 270 ¢ per gallon ¢ per gallon 92 260 250 240 260 250 240 HO1 HO2 HO3 9/19/2014 HO4 HO5 HO6 9/26/2014 HO7 HO8 HO9 HO10 HO11 HO12 10/3/2014 QS1 10/10/2014 QS2 QS3 9/19/2014 QS4 QS5 QS6 QS7 9/26/2014 QS8 QS9 QS10 QS11 QS12 10/3/2014 10/10/2014 3-2-1 REFINING MARGIN 2-1-1 REFINING MARGIN NYMEX 3-2-1: 12-Month Strip ICE 2-1-1: 12-Month Strip 27.00 27.00 21.00 21.00 $ per barrel $ per barrel * Only 8 contracts available for European Gas Oil 15.00 9.00 3.00 15.00 9.00 3.00 1 2 9/19/2014 3 4 5 9/26/2014 6 7 8 9 10/3/2014 10 11 12 Avg. 10/10/2014 1 2 9/19/2014 3 4 5 6 9/26/2014 7 8 9 10/3/2014 10 11 12 Avg. 10/10/2014 * Only 8 contracts available for European Gas Oil October 16, 2014 Page 11 of 12 Weekly Refining Indicators Report Disclosures Information and sources for all charts and tables in this report were compiled from Howard Weil, EIA and Bloomberg. Analyst Certification I, Blake Fernandez, certify that the views expressed in this research report accurately reflect my personal views about the subject securities or issuers; and I, Blake Fernandez, certify that no part of my compensation was, is, or will be directly or indirectly related to the specific recommendation or views contained in this research report. Important Disclosures This report was prepared by a Howard Weil Research analyst. Howard Weil is a Division of Scotia Capital (USA) Inc., a US Registered broker-dealer and a member of the New York Stock Exchange and FINRA. Howard Weil Research analysts focus primarily on the US Energy Sector. Scotia Capital (USA) Inc. is a wholly owned subsidiary of Scotia Capital Inc., a Canadian registered investment dealer, and indirectly owned by The Bank of Nova Scotia. 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