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Released September 19, 2024 | SUGAR LAND
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Written by Daniel Graeber and Hillary Stevenson for Industrial Info Resources (Sugar Land, Texas)--U.S. inflationary pressures are easing, crude oil prices are well below the $100/barrel (BBL) level and gasoline is relatively cheap, though refiners aren't making it easier for everyday consumers.
Markets on Wednesday were on edge ahead of a rate decision from the U.S. Federal Reserve. With annual inflation moving closer to the Fed's target rate of 2%, the Fed cut its lending rates by 50 basis points, or 0.5%, to make borrowing easier.
Inflation topped 9% annually in the U.S. economy in June 2022 as market pressures from the war in Ukraine and rampant demand during the post-vaccination period of the COVID-19 pandemic added up. The price of Brent crude oil, the global benchmark, flirted with $130 per barrel that year and retail gasoline prices reached $5.22 per gallon.
Cheaper lending rates and a spike in the geopolitical risk premium due to mass casualties in Lebanon on Tuesday and Wednesday would normally create bullish conditions for commodities, but concerns about the overall health of the global economy, particularly China's, was weighing on markets.
Brent crude oil was trading down about 1% shortly after trading began in New York to hit $73.50/BBL on September 18. West Texas Intermediate was down more than 2% to lose its grip on the $70/BBL mark.
As crude oil prices account for the bulk of what consumers see at the pump, drivers should expect lower retail gasoline prices. But while prices nationally are a good $0.20/gallon lower than this time last month, travel club AAA showed a 2-cent increase overnight to reach $3.22/gallon of regular unleaded.
Drivers should be getting a break over the remainder of the year as refiners started switching to cheaper-to-produce winter blend of gasoline this week. However, planned work in September, combined with unplanned outages, are counter-acting the dip in prices that would usually follow the introduction of winter gasoline.
But not all segments of the country are created equal. There are five so-called PADDs in the country, or Petroleum Administration for Defense Districts. Those were created during World War II to help with the distribution of refined petroleum products such as diesel and gasoline.
PADD III is the Gulf Coast. Because of the dense network of refineries, prices there tend to be far lower than in the rest of the country. Drivers in Texas, for example, are paying about $2.75 per gallon on average.
PADD II is the Great Lakes. It also has a dense network of refineries that sometimes process the heavier type of crude oil found in Canada. Those refineries tend to enter a period of maintenance during the switch over from summer to winter gas.
Travel club AAA finds the average price in the greater Chicago metropolitan area jumped 5 cents overnight Tuesday to reach $3.60/gallon. In Detroit, prices were steady, but cities along Lake Michigan in the lower peninsula saw the price at the pump jump 12 cents in 24 hours to reach $3.32/gallon.
Planned PADD 2 Outages in September
In addition to the refinery outages, fuel waivers for Illinois, Indiana, Michigan and Wisconsin expired on September 15, which allowed sales of cheaper-to-produce gasoline to be sold following a nearly one-month outage at Exxon Mobil's (NYSE:XOM) (Spring, Texas) 250,000-BBL/d refinery in Joliet, Illinois. Click here for the plant profile.
The federal government expects retail gasoline prices to average $3.30/gallon this year, a 20-cent discount from 2023.
Industrial Info Resources (IIR) is the leading provider of industrial market intelligence. Since 1983, IIR has provided comprehensive research, news and analysis on the industrial process, manufacturing and energy related industries. IIR's Global Market Intelligence (GMI) helps companies identify and pursue trends across multiple markets with access to real, qualified and validated plant and project opportunities. Across the world, IIR is tracking over 200,000 current and future projects worth $17.8 Trillion (USD).
Markets on Wednesday were on edge ahead of a rate decision from the U.S. Federal Reserve. With annual inflation moving closer to the Fed's target rate of 2%, the Fed cut its lending rates by 50 basis points, or 0.5%, to make borrowing easier.
Inflation topped 9% annually in the U.S. economy in June 2022 as market pressures from the war in Ukraine and rampant demand during the post-vaccination period of the COVID-19 pandemic added up. The price of Brent crude oil, the global benchmark, flirted with $130 per barrel that year and retail gasoline prices reached $5.22 per gallon.
Cheaper lending rates and a spike in the geopolitical risk premium due to mass casualties in Lebanon on Tuesday and Wednesday would normally create bullish conditions for commodities, but concerns about the overall health of the global economy, particularly China's, was weighing on markets.
Brent crude oil was trading down about 1% shortly after trading began in New York to hit $73.50/BBL on September 18. West Texas Intermediate was down more than 2% to lose its grip on the $70/BBL mark.
As crude oil prices account for the bulk of what consumers see at the pump, drivers should expect lower retail gasoline prices. But while prices nationally are a good $0.20/gallon lower than this time last month, travel club AAA showed a 2-cent increase overnight to reach $3.22/gallon of regular unleaded.
Drivers should be getting a break over the remainder of the year as refiners started switching to cheaper-to-produce winter blend of gasoline this week. However, planned work in September, combined with unplanned outages, are counter-acting the dip in prices that would usually follow the introduction of winter gasoline.
But not all segments of the country are created equal. There are five so-called PADDs in the country, or Petroleum Administration for Defense Districts. Those were created during World War II to help with the distribution of refined petroleum products such as diesel and gasoline.
PADD III is the Gulf Coast. Because of the dense network of refineries, prices there tend to be far lower than in the rest of the country. Drivers in Texas, for example, are paying about $2.75 per gallon on average.
PADD II is the Great Lakes. It also has a dense network of refineries that sometimes process the heavier type of crude oil found in Canada. Those refineries tend to enter a period of maintenance during the switch over from summer to winter gas.
Travel club AAA finds the average price in the greater Chicago metropolitan area jumped 5 cents overnight Tuesday to reach $3.60/gallon. In Detroit, prices were steady, but cities along Lake Michigan in the lower peninsula saw the price at the pump jump 12 cents in 24 hours to reach $3.32/gallon.
Planned PADD 2 Outages in September
- BP's (NYSE:BP) (London, England) 430,000-barrel-per-day (BBL/d) refinery in Whiting, Indiana, is preparing for a 60-day planned maintenance beginning September 20 that will reduce crude throughput by 250,000 BBL/d when the largest crude distillation unit (CDU) is taken offline. Subscribers to Industrial Info's Global Market Intelligence (GMI) Petroleum Refining Plant Database can click here for the plant profile of the Whiting refinery.
- Meanwhile, HollyFrontier remains on schedule for a late September planned turnaround at its 162,000-BBL/d El Dorado refinery in Kansas, which will include some gasoline-making units. HollyFrontier is part of HF Sinclair Corporation (NYSE:DINO) (Dallas, Texas). Subscribers can click here to view a profile of the El Dorado refinery.
- Marathon Petroleum Corporation (NYSE:MPC) (Findlay, Ohio) started a 42-day plant-wide turnaround at its 135,000-BBL/d Detroit Refinery on September 12. Major units include the lone crude, 50,000-BBL/d fluid catalytic cracking unit (FCCU) and the 28,000-BBL/d delayed coker. Subscribers can click here for the plant profile
- CITGO's (Houston, Texas) 175,000-BBL/d refinery in Lemont, Illinois, began a 25-day planned maintenance on the 20,000-BBL/d catalytic reformer and benzene con treater (BCT) on September 6. Subscribers can click here for the plant profile.
- On September 3, Cenovus Energy Incorporated (NYSE:CVE) (Calgary, Alberta) began 45 days of planned maintenance on the 40,000-BBL/d FCCU, 31,300-BBL/d delayed coker and sulfur recovery unit (SRU) at its 165,000-BBL/d Lima, Ohio, refinery. The 172,000-BBL/d Crude 2 (sweet) was having 12 days of minor maintenance "swoop," also starting on September 3, and would resume operations while the above-mentioned units remained offline. Subscribers can click here for the plant profile.
- Marathon experienced a power blip that shut down several units its 255,000-BBL/d Catlettsburg, Kentucky, refinery, on September 16. A restart of the units was planned for September 18. Subscribers can click here for the plant profile.
In addition to the refinery outages, fuel waivers for Illinois, Indiana, Michigan and Wisconsin expired on September 15, which allowed sales of cheaper-to-produce gasoline to be sold following a nearly one-month outage at Exxon Mobil's (NYSE:XOM) (Spring, Texas) 250,000-BBL/d refinery in Joliet, Illinois. Click here for the plant profile.
The federal government expects retail gasoline prices to average $3.30/gallon this year, a 20-cent discount from 2023.
Industrial Info Resources (IIR) is the leading provider of industrial market intelligence. Since 1983, IIR has provided comprehensive research, news and analysis on the industrial process, manufacturing and energy related industries. IIR's Global Market Intelligence (GMI) helps companies identify and pursue trends across multiple markets with access to real, qualified and validated plant and project opportunities. Across the world, IIR is tracking over 200,000 current and future projects worth $17.8 Trillion (USD).
