November 4, 2008 at 11:10 am #3338
Gasoline Nears Record Discount to Crude, Punishing Refiners
By Aaron Clark
Nov. 3, 2008 (Bloomberg) — Gasoline futures neared a record
discount to crude oil, punishing refiners as the U.S. economy
showed more signs of weakness.
The profit margin, or crack spread, for turning crude oil
into gasoline fell more deeply into negative territory, dropping
$1.72 to minus $6.71 a barrel at 3:15 p.m. A close at that level
would be the 12th negative close in 13 sessions. The record low
is minus $7.36 set on Sept. 22.
“I think we are going to see a big cutback in refining and
a lot of these refineries will be down longer for scheduled and
unscheduled maintenance,” said Fain Shaffer, president of
Infinitytrading.com, a commodities brokerage in Medford, Oregon.
“At these numbers it’s just not profitable to operate.”
Gasoline for December delivery fell 13.25 cents, or 8.9
percent, to settle at $1.3625 a gallon at 2:59 p.m. on the New
York Mercantile Exchange. Gasoline demand fell 3.2 percent last
week from a year earlier, the Energy Department reported Oct. 29.
“People are feeling poor so they aren’t driving a lot,”
said Sander Cohan, a consultant with Energy Security Analysis
Inc. in Wakefield, Massachusetts. “Buried in that gasoline
number is an expectation that the economy is going to slow even
Tight credit, falling consumer confidence and the weakening
economy, the same forces that suppressed buying in September,
hurt automakers last month.
General Motors Corp. said in a statement today that its
October sales of cars and light trucks tumbled 45 percent from a
year earlier. Ford Motor Co. reported a 30 percent decline and
Toyota Motor Corp. a 23 percent drop. Honda Motor Co.’s sales
were down 25 percent, and Nissan Motor Co.’s slid 33 percent.
Factory Index Falls
The Institute for Supply Management’s factory index fell to
38.9, lower than anticipated by economists surveyed by Bloomberg
News and the lowest level since September 1982, the Tempe,
Arizona-based group reported today.
Regular gasoline at the pump, averaged nationwide, fell 2.1
cents to $2.415 a gallon, AAA, the nation’s biggest motoring
group, said today on its Web site.
Heating oil for December delivery fell 10.14 cents, or 4.9
percent, to settle at $1.9828 a gallon. The crack spread for
heating oil fell 29 cents, or 1.5 percent, to $19.43 a barrel.
November 4, 2008 at 11:22 am #6475
Here is another update on Oil industry evolving economics:
(& think it is beginning to look like “Chicken-little & sky is falling” time)!
There was also a news item that gasoline was breaking the $2/gallon and few stations were even having price wars again – which threatens to derail several initiatives. <My COP friends tell me Tulsa Ok has $1.87/gal gas price>
I am fairly certain that US petcoke production are once again going to be at or below production levels of 2004 and any downtimes due economics could set new low for last 4 years against a growing petcoke capacity ability. The refining industry has habit of making high volumes of petcoke available during low demand and low market prices – perhaps the coker capacity tsunami will catch up with petcoke fuel market yet!
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