Daily Energy Report (with 5 charts)
Gasoline prices & crude, Plunging US oil supply, Saudi crude inches up, Biden & offshore drilling, Continued decline in rig count, Russian diesel exports, Canada’s rare earths, Japan LNG, and more.
Chart of the Day: US gasoline prices detached from crude?
What is the relationship between crude prices and gasoline prices in the US? Figure (1) above is an index showing trends in Brent and WTI spot prices vs. gasoline prices in the US (all in nominal terms). The Index starts from the year 2000 at 100.
EOA’s Main Takeaway
Yesterday, our friends at @HFI_Research (
) tweeted: “Latest crude rally has come at the expense of refining margins. For consumers, the end price has been the same.”
The tweet came at a time when we were working on research regarding the cost of gasoline and choices for the Biden Administration to deal with high gasoline and diesel prices, especially next year.
As crude prices rallied in the last two weeks, gasoline prices did not, as shown in the far-right part of Figure (1) above.
Here are some preliminary results:
US gasoline prices are more correlated with Brent than WTI.
About 89% of changes in gasoline prices can be explained by changes in crude prices.
However, looking at 2023 relative to the past, gasoline prices were detached from crude prices. Only 40% of changes in gasoline prices can be explained by changes in crude prices. A large part of the difference can be attributed to refinery outages and record technical failures.
Story of the Day
Global oil buyers are encountering some of the steepest prices for supplies in recent times due to shrinking stockpiles at the primary US storage hub in Cushing, Oklahoma. This tightening of oil inventory is impacting markets from Asia to Europe to the Middle East. As a result, US crude oil in Asia is being offered at its highest premium this year. Additionally, the spread between Brent and Middle East oil has surged to levels not seen since February.