Brian L. Milne, Energy Editor, Schneider Electric
Gasoline prices in regional spot markets across the U.S. rallied during the second week of July, pushing higher on a host of features including two gasoline unit outages at Port Arthur refineries in Texas. The downed units came alongside data showing strong demand for gasoline, an unexpected decline in supply, and the second straight week of huge drawdowns in commercial crude stocks.
The rally in spot gasoline markets across the country also found support on tropical storm activity in the Atlantic Ocean, ongoing concern over unrest in Egypt, and supportive data on the U.S. economy. Federal Reserve Chairman Ben Bernanke also sought to ease investor concern, saying the central bank’s efforts to stimulate the economy would continue for some time, sparking a rally in equities.
Valero Energy confirmed it was shutting the fluid catalytic cracking unit at the 310,000 barrel-per-day (bpd) refinery at Port Arthur July 12 for an undetermined period of time “to address recent outages,” with an FCC a gasoline making unit. Earlier in the week, a filing by Motiva with the Texas Commission on Environmental Quality indicated an operational issue at its 600,000 bpd Port Arthur refinery that shut the FCC.
The outages followed an increase in the U.S. refinery run rate since early June, with the weekly utilization rate progressively higher through the first week of July and highest of 2013, according to data from the Energy Information Administration (EIA).
Meanwhile, implied demand for gasoline has now held above the five-year average for two consecutive weeks through July 5; the first time in 2013 that it has eclipsed the average EIA data shows. For the four weeks ended July 5, implied gasoline demand averaged 9.082 million bpd, 218,000 bpd or 2.5% above the comparable year-ago period.
EIA data also showed domestic commercial crude stocks were drawn down by more than 20 million barrels during the two-week period ended July 5, in part due to a pipeline outage in Alberta in late June through July 2. Crude stocks, which surged in late May to their highest rate since EIA records began in the early 1980s, fell below the year-ago supply rate during the first week of July for the first time in 2013.
View Schneider Electric’s Weekly and Historical Fuel Price Index.
After four consecutive weeks with a decline, down 16.3 cents since June 10 to a $3.492 gallon better than six-month low on July 8, EIA’s U.S. average price for all grades of regular gasoline are set to turn higher with a vengeance.
About the Author
Brian L. Milne is the Energy Editor for Schneider Electric—a leading business-to-business provider of real-time commodity information services among many other activities. Milne has been focused on the energy industry for 17 years as an analyst, journalist and editor. He can be reached at firstname.lastname@example.org.