As we continue to watch the market fall, crude finished at $44.66/bbl yesterday, inching closer and closer to the intraday yearly low we witnessed in the late winter. This morning, crude has dropped from the settle yesterday to just under $44/bbl, so it’s safe to say that the bearish trend continues. OPIS (Oil Price Information Service) analysts predict oil prices will face a huge test when crude demand drops as fall refinery maintenance hits full swing. It looks like the 2015 low on WTI isn’t an unrealistic expectation.
Crude oil pricing is mainly determined through worldwide demand, supply, and global events. It is the first to react to world news, and it is also the first commodity to be traded. In today’s market, the abundance of crude oil supply is currently the driving factor in the fall of the price per bbl of crude.
Diesel and gasoline are also impacted by global events, but they can also be influenced by regional and local news. News such as refinery fires, pipeline disruptions, regulations, and weather can all affect the market pricing of diesel and gasoline, which thus affects retail. Volatility in diesel prices spike in planting and harvest seasons; i.e., spring and early fall. In the winter, there is a high demand for heating oil, peak season for diesel demand, and increases in seasonal demand can put pressure on the prices of diesel. Lastly, volatility of gasoline spikes in the summer because of driving season and tighter supply.
BP says that it will shut down a 100,000 bpd crude unit at its 410,000 bpd Whiting, IN refinery. Downtime is expected to be about 3 weeks and estimated production loss is 300,000 bbls of gasoline, and 940,000 bbls of distillate over that period of time. In addition, Marathon’s Catlettsburg refinery is still down after a Sunday power outage and the restart has been delayed. This is causing some higher pricing on products in PADD 2.