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Gasoline Supply Concerns Trump Crude SPR Rumors

Tyler Durden's picture




 

While most eyes are firmly focused on the crude oil markets for indications of QEternity spillover, geopolitical escalation, and/or SPR rumors; the end-product market has gone only one way for the last two weeks. Thanks to technical supply constraint concerns (refinery maintenance in the Atlantic Basin and supplies at their lowest in over four years) RBOB gasoline prices have jumped over 18% in the last few days as crude has drifted - which can only mean down-the-supply-chain price rises at the pump for car-drivers everywhere (whether you can find the gas station using your new iPhone 5 or not).

 

...clearly someone got squeezed...

 

Chart: Bloomberg

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Fri, 09/28/2012 - 15:25 | 2839812 CPL
CPL's picture

Thar she blows.

 

Look at the spreads in RSI and...well everything.  Wow.

Fri, 09/28/2012 - 15:29 | 2839821 LawsofPhysics
LawsofPhysics's picture

dump into the close?

Fri, 09/28/2012 - 15:51 | 2839881 Alea Iactaest
Alea Iactaest's picture

Any discussion of refinery capacity should at least mention the early August fires at the Chevron refinery in Richmond, CA and the HollyFrontier refinery in Tulsa, OK. Reduced supply over and above any routine scheduled maintenance.

I haven't seen these mentioned anywhere in discussions of gasoline prices.

Fri, 09/28/2012 - 16:03 | 2839908 Mark Carney
Mark Carney's picture

here i was thniking that my bloomberg app on my BB went nutso,

 

"WTF? GAS up 6% today, lol"

Fri, 09/28/2012 - 16:50 | 2840050 ShrNfr
ShrNfr's picture

nov. delivery is 291.09 up 1.37 cents. some ahole got his nuts squeezed trying to close out too late in the game. Open interest on oct only  5,265 contracts at close. nov. 115,000+

Fri, 09/28/2012 - 19:29 | 2840440 CrazyCooter
CrazyCooter's picture

Also, if I am not mistaken, general US consumption of gas is quite down (i.e. unemployed people don't drive to work), a subject covered here in the past. Further, another subject covered here was refinery closings (not shut downs) in the North East US. I believe the refinery was in New Jersey, was quite old, needed a lot of updates, and just wasn't profitable. IIRC, that would have been about 20% of the refining capacity of New England. The article discussed the logistics of getting replacement fuels from other refineries, which were much farther away.

I also think the US exports more gas now too.

So, this is probably just the dynamics of the market as things tighten up a little bit.

Regards,

Cooter

P.S. OilPrice had some coverage of the NE refinery closings (which were DOE mandated LOL)

http://oilprice.com/Energy/Crude-Oil/US-East-Coast-Faces-Severe-Oil-Shortages-and-High-Prices-as-Refineries-Close.html

Fri, 09/28/2012 - 15:55 | 2839884 Beam Me Up Scotty
Beam Me Up Scotty's picture

"dump into the close?"

Appears to be a flash smash.  I saw it on CNBC earlier and thought it was a misprint.  Gas looked up 19 cents.  Now only a cent.  Fat finger?  Or was someone tanking down buck pitchers this afternoon?

Fri, 09/28/2012 - 16:53 | 2840056 ShrNfr
ShrNfr's picture

Change in the front month contract. nov. is front month now up 1.39 cents. oct was front month when it was up 19 cents.

 

Fri, 09/28/2012 - 16:13 | 2839944 CPL
CPL's picture

Again to restate my original suggestion,

Eventually someone is going to eventually just flash smash the market and not just flash crash it.

Someone got drunk and stopped messing around with the foreplay and just jammed it in.

Fri, 09/28/2012 - 16:48 | 2840042 rocker
rocker's picture

Sometimes I am amazed at how the media and even ZH, (ZH usually does not get baited, in reality), will buy in to a brainwashing by the powers to be. Do we really have peak oil. I think not. I never bought it, never will. It just amazes me that now even Boone Pickens says we have drilled our way out of the oil import problem. Yes, we have some refinery problems. Part of the plan, that's why the oil companies spun off most of those businesses. And they all seem to be making bigs bucks by their stock prices. So why do we have high gas prices. I say it is nothing short of fraud. Afterall, the Big Banks, (Deutche Bank, JP Morgan, Goldman Sachs. Barclays, and even the Kock Brothers), bought oil by the tanker fulls. They have sat on most of it. They want top dollar. They determine what price they sell it to the refineries who process it and add their small margin on it and we buy it after.

You can't have it both ways unless it is all rigged.  You can't have a global recession. No growth. A U.S. contraction too, slow or no growth and tell me that oil demand is soaring. So pick your thesis. But they both don't work together. We are either expanding or contracting. Oil should reflect that reality.

Last but not really my last thought. It could have nothing to do with the elections, could it? LOL on that one. I won't even express my opinion on that can of worms.

Bottom line, somebody is ripping us off on gas prices. With the prices of most other commodities, Sugar, Cocoa, Cotton, Coffee, Industrial Metals, and meats falling for over a year.  I bet the Kock Brothers are doing the most damage as well as some private hedge funds too.  So bend over while they smile on their yachts.  They have actually figured out how to get you to fill their yachts and buy them too.    Have a Great Day All.  

Fri, 09/28/2012 - 17:35 | 2840173 Flakmeister
Flakmeister's picture

The US no longer drives global oil demand...

I strongly suggest you read the following article and peruse the comments on this artcle that came out this week:

http://www.theoildrum.com/node/9495

Pay very close attention to graph titled "Western Hemisphere Exports"....

It is down 17% since 2005....

A bit further down is a chart of world discoveries and producition... We have been extracted more oil than we are finding for nigh on 30 years....

Fri, 09/28/2012 - 18:32 | 2840323 NidStyles
NidStyles's picture

None of that cover's what Peak Oil is as a theory.

Fri, 09/28/2012 - 19:33 | 2840460 CrazyCooter
CrazyCooter's picture

Peak Oil is just common sense. The point at issue is "when" the peak occurs.

Oil takes millions of years to form. We are using up the whole lot of it in ~200 years. It seems pretty straight forward to realize that the accumulation rate and burn rate are off by more than a few orders of magnitude, therefore oil will run out at some point.

Given that we are consuming oil at an exponetntial rate, I will leave it to you to figure out exactly how that story ends.

Regards,

Cooter

Fri, 09/28/2012 - 19:47 | 2840490 NidStyles
NidStyles's picture

You can not consume something at an exponential rate. The Rate of Change may increase, but it's certainly not exponential.

Fri, 09/28/2012 - 23:11 | 2840954 Oliver Klozoff
Oliver Klozoff's picture

You are an idiot.

Ever see the consumption of sugar by yeast in a wine must?

How is that not "exponential"?

Duh.

Fri, 09/28/2012 - 18:33 | 2840327 NidStyles
NidStyles's picture

None of that cover's what Peak Oil is as a theory.

Sat, 09/29/2012 - 11:36 | 2841542 Flakmeister
Flakmeister's picture

And pray tell, what would be the conclusion that one would draw from analysing the data presented therein?

The only "theory" in Peak Oil is how the modern industrialized world will deal with it...

Fri, 09/28/2012 - 19:50 | 2840482 rocker
rocker's picture

Went to the site and found it kind of amusing how the site starts. "The Oil DRUM" and it seems to be a rebutle of somebody else's work who believes there are ways to get more. I think that oil is a plenty. Maybe, not enough as we consumed in the past. But the surge in demand of 2002 to 2010 does not seem to me to be equal to a time in the near future. What ever you may believe. I like to think of it like this. During those years America used every flying object we have for a war. Helicopters, tanks, and air-craft carriers which use a huge amount of fuel. It takes many gallons of fuel to push a carrier around. I have a small 21' jet boat with a 460 ford in it.  I could blow 50 gallons of fuel of real quick. Think about what it takes to run those twin chop helicpters and push those aircraft carriers. The military used every piece of equipment we had during the above period. Our military probably used more fuel per day than the U.S. did in cars alone.  Yes, I agree that it may be costlier in the future to pull the oil from the gound and oceans. But, I also believe the U.S. is sitting on many unexplored fields of oil. Look at what Petrobras found. May be larger than anything the Saudis have. I kind of think the U.S. loved the Saudi oil because it was so easy to pull and the labor was cheap. If their people only knew. On the other side. Higher prices always brings on new thinking. Like liquid gas. Kind of wierd how I saw these cars during the 70's. And it took higher prices to bring out the concept again. I think the oil companies shutter at the thought of it. Do you know that with synthetic oil one can run a propane gas car for 30,000 miles before having to change the oil because it is cleaner burning. It may even be longer. So there are methods to lower usuage and get more at the same time. I am a "all of the above" about energy. I don't think that U.S. citiznes have a appetite for a war like the past 10 years because of cost alone. The whole thing was on a charge card financed by the Chineese Credit Bond department. Now the Bernankee has to buy it because China wants the bill paid. The real shocker for me was when America did not even have enough helicopters here to save the people during Katrina. That was the day I woke up. They acutally were putting dismantled helicopters together to run as lifelines. Amazing. Hence, I still do not believe in peak oil. l believe price will demand other methods and technology to accomplish what is needed for transportation. Hence, less demand and more production.

The stock market seems to agree. All the Oil Service stocks are belly up. Seems the market senses less demand too.  Check out GDP, HAL, BHI, WFT and CRR which may soon look like GMXR.  So maybe the market is smarter than both of us are.

Fri, 09/28/2012 - 20:45 | 2840596 DaveyJones
DaveyJones's picture

a lot of "I think's" and "I believes" does not equal evidence

Fri, 09/28/2012 - 23:20 | 2840968 Oliver Klozoff
Oliver Klozoff's picture

Think of the ride to work you have in the morning and again at night. All those pesky cars- traffic!

Think that is happening on every freeway in your city, in every city, in every state, all across the country, everyday as it has for decades. Now the rest of the world is joining in.

How could we POSSIBLY run out?

Fri, 09/28/2012 - 18:37 | 2840337 jballz
jballz's picture

 

It is not so simple. It is more simple. It is 1.2 billion chinks on motor scooters. It is the exponential gain of the human locust plague. You cannot overcome it. 

US crude demand has been stagnant since '08 and it shows, Brent/world demand has held premium. The shift to global demand has taken the trading world off the WTI standard, begrudgingly. Take any countries reserves and divide by world consumption and you get anywhere from a few months to a few years. 

Fprtunatley we have a kick ass military (and by 'we' I mean US) on the leashe of very short sighted corporate interests. They will do what it takes to keep the oil flowing and affordable to the masses, until demand ultimately suffocates the artificial discount provided at the barrel of a gun. Then it is all over. The highest bid will price out the chinks on the scooters first. Then the SUV soccer momes, then transports. Then ultimately everyone but the government and the military.They will have enough to last forever.

You will be on a bike, yelling at passrsby..."Peak oil was a lie!"

 

 

 

 

Fri, 09/28/2012 - 19:39 | 2840468 CrazyCooter
CrazyCooter's picture

I would point out that when fuel prices really take off, it will be the most inefficient users who will cut consumption and not the other way around. Consider three fuel consumers:

  • A farmer in a developing country who uses diesel, instead of manual labor, to work his farm land
  • A professional on a scooter commuting to work in SE Asia
  • A suburban mom driving her SUV to soccer practice

High fuel prices will be absorbed by those who recieve the most value from its consumption. Entire cities in the US are built on low fuel prices and they will be the first to buckle under as prices continue to climb.

Regards,

Cooter

Sat, 09/29/2012 - 00:05 | 2841054 Oliver Klozoff
Oliver Klozoff's picture

I discussed this very issue w/ the wife 2 yrs ago.

"Suppose we enter a crunch for gas, nat gas, food, etc.. how will the idiots in charge respond? Certainly we will be provided an ""allotment""" and, IF it is based on PREVIOUS use we are HURTING ourselves by conserviing NOW!"

My plan?

Prepare for the worst but not noticeably.

 

 

A big word, "IF".

Sat, 09/29/2012 - 03:59 | 2841214 rocker
rocker's picture

Does that mean all those yachts will have to be beached and rented as homes. The Saudis and Dubai are not going to like that.

Sat, 09/29/2012 - 11:37 | 2841544 Flakmeister
Flakmeister's picture

If you are going to troll, at least do it well...

Sat, 09/29/2012 - 15:11 | 2841883 rocker
rocker's picture

What's up with that. Don't you believe Dubai and the Saudis have bigger and better yachts then America.

I guess you don't believe they built a paradise of connected islands made out of white ocean sand.

I guess you don't believe they have snow skiing while it's near 100 degrees outside.

I guess you don't believe that they actually have gold bathtubs and toilets. All our money goes somewhere.

The sheeple believe the pounding of the oil drum. I don't. The price has more to do with our dollar than actual demand.

That correlation is as real as the price of gold. Maybe, I express what I say in a unusual way.

But I do speak what I think.  Not how I am told to think. I surely am not one of the brainwashed sheeple.

Fri, 09/28/2012 - 19:30 | 2840451 roadhazard
roadhazard's picture

Netinyeahoo gave a New, New estimate of when Iran would have nuke power for a bomb at Spring 2013...zzzzzzz

The price of oil should now plummet as the F E A R of war in the Gulf is postponed for the winter. And those plant shut downs, how many months does it take to reopen. I'm smelling BS. And the refinery fire, is that not fixed? Didn't Brazil or someone have a huge fire and they said it would take two eeks to fix. It's hard to get good help I guess.

Sat, 09/29/2012 - 15:17 | 2841890 rocker
rocker's picture

Love it, Nitinyeahoo, what a piece of shit. He can't leave us soon enough to rid the world of his garbage.

Take him and the hard liners in Iran, lock them up in a room and throw the keys away. Nobody would even notice.

Sat, 09/29/2012 - 04:58 | 2841230 d_taco
d_taco's picture

Peak-oil theory makes oil perfect for speculators!! And for the whole boom-bust circle.
I keep it simple.
Due to peek-oil theory and geological tension prices are much hire than you expect on supply and demand.
In such a situation we all know producers are willing to produce more than there is demand.
For this reason a lot oil is stored, adding to the supply site of the equation.
High price make demand go down more.
A bust is inevitable. Unless a part of the production capacity is destroyed. In such a situation a clean war with Iran is for the Saudi's an economical necessity.
So thanks to speculation price and production went up and demand went down.
This is results in a bubble.
This process happens always in a marked that is considered tight. The real existence of peak-oil is irrelevant.

You can find on the internet that different producers failed to sell their oil loads for en Ocktober

For the US there is nothing to win with a war with Iran and it will also be very destructive for the US. I think Romney voters want him to finish the job Bush started “Bankrupting the USA” on behave of the Saudi and Israeli masters.

 

Sat, 09/29/2012 - 11:39 | 2841545 Flakmeister
Flakmeister's picture

A lot of bluster and weasel words...

Wheres the Beef?

Sun, 09/30/2012 - 11:58 | 2843078 PivotalTrades
PivotalTrades's picture

Outside of the softs (SB,CC,KC) everything you said was a lie to support your erroneous claim. SI,HG.GC, HO,RB,CL,) are up from last OCT. Your religion is backrupt.

Fri, 09/28/2012 - 20:45 | 2840594 Da55id
Da55id's picture

I don't have to care. I drive a Volt. 1,897 miles so far using 1.4 gallons of gas. Junk away my friends. I love passing gas (stations)

Fri, 09/28/2012 - 23:38 | 2840996 Oliver Klozoff
Oliver Klozoff's picture

As one of the team of folks who developed the volt, I find it very interesting to hear from those who purchased and drive them.

Just know that despite all of the "you'll never recover the cost of the vehicle in gas you'll save" nonsense you will hear from posters, you are driving the absolute best that our current technology can offer at this time.

Fri, 09/28/2012 - 15:26 | 2839813 mayhem_korner
mayhem_korner's picture

 

 

Decoupling.  Nice.  Should be all tidied up about 3 weeks ahead of the election.

Fri, 09/28/2012 - 16:57 | 2840061 ShrNfr
ShrNfr's picture

Shit guys, doesn't anyone recognize a short squeeze when they see one??? Good grief.

Fri, 09/28/2012 - 15:26 | 2839814 alien-IQ
alien-IQ's picture

funny...I don't feel wealthier when I have to dish out $4 per gallon. In fact...quite the contrary.

I guess the "wealth effect" was meant for someone other then myself.

Fri, 09/28/2012 - 15:45 | 2839843 Frozen IcQb
Frozen IcQb's picture

At least you have a friend at the Bank of Canada who is on a bond buying binge to prevent the $Can from escalating and having you pay $8 per gallon given that the US imports 2.5 mil brls/day from Canada which is more than Saud and Mexico’s exports to the US combined.

 

 

Fri, 09/28/2012 - 16:05 | 2839914 Mark Carney
Mark Carney's picture

What you talking aboot foo?

 

Look, over there!  A beaver!

Fri, 09/28/2012 - 22:37 | 2839921 Frozen IcQb
Frozen IcQb's picture

This:

http://www.eia.gov/pub/oil_gas/petroleum/data_publications/company_level...

and this:

http://ca.reuters.com/article/domesticNews/idCABRE88O0WO20120925

and you thought it was to help the manufacturing sector?   Foo!

 

The people on this board are highly knowledgeable and as far as I’m concerned, they know exactly what I have just said to be true and what a rising Canadian dollar would do to gas prices at the US pumps.

 

 

 

Sat, 09/29/2012 - 09:35 | 2841354 Frozen IcQb
Frozen IcQb's picture

Young foo!, Only now at the end do you understand.

Your feeble skills are no match for the power’z of the dark side.

You will pay the “pump” price for your lack of vision.

http://www.youtube.com/watch?v=tRVXPXetgMo

 

Fri, 09/28/2012 - 15:27 | 2839815 LawsofPhysics
LawsofPhysics's picture

Long bikes.

Fri, 09/28/2012 - 16:52 | 2840046 White.Star.Line
White.Star.Line's picture

Kona bikes feel "collapse-worthy"....

Fri, 09/28/2012 - 16:50 | 2840049 DaveyJones
DaveyJones's picture

long long bikes

Fri, 09/28/2012 - 19:34 | 2840461 JuliaS
JuliaS's picture

Long shoes... long clown shoes.

Fri, 09/28/2012 - 15:30 | 2839817 Jlmadyson
Jlmadyson's picture

Should "lift" consumer spending for September and October right?

All net positive for average joe!

It's the expiring contract but 50 cents in a week or so is nuts!

Someone having some real fun end of quarter.

20 cents in a day is just I got drunk and went fat finger incredible.

Fri, 09/28/2012 - 15:40 | 2839848 Bam_Man
Bam_Man's picture

"Zees eez zah price staahbeeleetee."

Fri, 09/28/2012 - 19:50 | 2840498 LMAOLORI
Fri, 09/28/2012 - 15:28 | 2839820 mayhem_korner
mayhem_korner's picture

 

 

"I'll take Energy for 600, Alex."

"Here's the answer: This was the last time refinery capacity was expanded in the U.S."

<buzzes in>

"What is 'before Return of the Jedi premiered in theaters'?"

"Correct, go again..."

Fri, 09/28/2012 - 15:33 | 2839825 LawsofPhysics
LawsofPhysics's picture

Funny, because that is right about where the labor force participation rate is too.  1980 levels.  Wait what?  wages matter?

Fri, 09/28/2012 - 15:34 | 2839830 alien-IQ
alien-IQ's picture

and that 600 will buy you....A tank of gas!!!!! weeeeee!!!!!! wealth effect!!!

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