This Week in Petroleum: Best of 2021 (12/22/2021)

By admin In Chemical Industry On December 23, 2021



This Week in Petroleum: Best of 2021

Today’s This Week in Petroleum articles were originally published throughout 2021. New feature articles of This Week in Petroleum will return on January 5, 2022. The retail price and inventory paragraphs, charts, and tables accompanying the feature article have been updated to reflect data from the latest Weekly Petroleum Status Report for the week ending December 17, 2021.

Published May 12, 2021: Cyberattack halts fuel movement on Colonial Pipeline

Figure 1. East Coast (PADD 1) regional motor gasoline inventories

Colonial Pipeline is a major mode of shipping for transportation fuels and other refined petroleum products that spans from the U.S. Gulf Coast to the East Coast. On Friday, May 7, the pipeline halted operations to contain the effects of a cyberattack. As of Wednesday, May 12, the pipeline had not resumed operations of its main lines, although some smaller lines are still operational. The company announced that it hopes to restore service by the end of the week.

Published July 21, 2021: U.S. renewable diesel capacity expected to increase significantly through 2024

Figure 2. U.S. renewable diesel production capacity

U.S. production capacity for renewable diesel could increase significantly through 2024, based on announced projects and those that are under construction. Growing targets for state and federal renewable fuel programs and incentives for renewable diesel production are driving this expansion. As of the end of 2020, we estimate U.S. production capacity for renewable diesel totaled nearly 0.6 billion gallons per year (gal/y), or 38,000 barrels per day (b/d), and we forecast it to reach 5.1 billion gal/y (330,000 b/d) by 2024 (Figure 2).

Published August 18, 2021: New Middle East crude oil futures contract began trading in March

Figure 3. Average daily open interest in front-month crude

On March 29, 2021, the ICE Futures Abu Dhabi (IFAD) exchange began trading the new Murban crude oil futures contract, which may potentially serve as a benchmark crude oil contract for crude oil exports out of the Persian Gulf. The contract is based on Murban crude oil, which accounts for a significant portion of crude oil produced by the United Arab Emirates’ (UAE) state oil firm, Abu Dhabi National Oil Company (ADNOC), for delivery at the Fujairah storage hub along the Gulf of Oman. This new contract represents a potential alternative to other regional contracts, most notably the Dubai Mercantile Exchange (DME) Oman crude oil contract, as well as the Platts Dubai crude oil pricing basket. Previous attempts to establish a Middle East contract to serve as a pricing benchmark have had mixed reception compared with the major global crude oil benchmarks Brent and West Texas Intermediate (WTI), despite the important roles that Middle East crude oil producers play as major global exporters.

Published September 15, 2021: High international demand and lower global supply contribute to rising propane prices

Figure 4. Weekly Mont Belvieu propane spot prices

Since mid-September 2020, propane prices at Mont Belvieu, Texas, the main U.S. hydrocarbon gas liquids (HGL) hub, have increased 120%, from $0.51 per gallon (gal) in the week ending September 11, 2020, to $1.12/gal in the week ending September 10, 2021 (Figure 4). Current propane wholesale prices are at their highest weekly average levels since February 2014. The recent rise in U.S. propane prices has occurred at a time when U.S. propane production, which averaged 2.3 million barrels per day (b/d) from January to June, is significantly higher than average domestic consumption (we report consumption as product supplied).

U.S. average regular gasoline and diesel prices decrease

The U.S. average regular gasoline retail price decreased 2 cents to $3.30 per gallon on December 20, $1.07 higher than a year ago. The Midwest price decreased more than 3 cents to $3.05 per gallon, the Rocky Mountain price decreased more than 2 cents to $3.41 per gallon, the East Coast and West Coast prices each decreased nearly 2 cents to $3.26 per gallon and $4.15 per gallon, respectively, and the Gulf Coast price decreased less than 1 cent, remaining virtually unchanged at $2.94 per gallon.

The U.S. average diesel fuel price decreased more than 2 cents to $3.63 per gallon on December 20, $1.01 higher than a year ago. The Gulf Coast price decreased more than 3 cents to $3.34 per gallon, the Rocky Mountain price decreased nearly 3 cents to $3.73 per gallon, the East Coast price decreased more than 2 cents to $3.61 per gallon, the Midwest price decreased 2 cents to $3.49 per gallon, and the West Coast price decreased nearly 2 cents to $4.38 per gallon.

Propane/propylene inventories decline

U.S. propane/propylene stocks decreased by 0.8 million barrels last week to 70.0 million barrels as of December 17, 2021, 5.9 million barrels (7.8%) less than the five-year (2016-2020) average inventory levels for this same time of year. Midwest and East Coast inventories each decreased by 0.5 million barrels, and Rocky Mountain/West Coast inventories decreased by 0.1 million barrels. Gulf Coast inventories increased by 0.2 million barrels.

Residential heating oil prices decrease, propane prices increase

As of December 20, 2021, residential heating oil prices averaged almost $3.35 per gallon, nearly 1 cent per gallon below last week’s price but more than 92 cents per gallon higher than last year’s price at this time. Wholesale heating oil prices averaged more than $2.35 per gallon, almost 4 cents per gallon below last week’s price but nearly 73 cents per gallon above last year’s price.

Residential propane prices averaged almost $2.71 per gallon, nearly 1 cent above last week’s price and more than 76 cents per gallon above last year’s price. Wholesale propane prices averaged almost $1.20 per gallon, less than 1 cent per gallon below last week’s price but nearly 36 cents per gallon above last year’s price.

For questions about This Week in Petroleum, contact the Petroleum Markets Team at 202-586-4522.