|
ANS outperformance
ANS at $2.54 premium to Brent as California refiners make summer gasoline
Steve Sutherlin Petroleum News
Alaska North Slope crude rose 47 cents May 8 to close at $86.12 per barrel and hold its commanding premium over West Texas Intermediate and Brent. WTI gained 61 cents to close at $78.99 and Brent rose 42 cents to close at $83.58.
At the end of the day, ANS sported a $7.13 premium over WTI and a $2.54 premium over Brent.
In recent months Brent has traded at a premium to ANS, but ANS surpassed Brent May 1 by 61 cents.
On May 2 ANS opened its lead, surging $2.07 to close at $86.12 while Brent managed a 23-cent gain to close at $83.67. WTI lost 5 cents to close at $78.95 on the day.
Some local West Coast factors may have contributed to the leap for ANS. As California refineries come back online from seasonal maintenance a scramble likely will ensue for crude feedstock to boost supplies of summer blend gasoline ahead of the summer driving season. The California Reformulated Gasoline (CARB) program requires a special summer blend for California which is designed to limit evaporation in summer heat. Refineries begin to produce summer blend in March and April.
This year supply is tight, according to Patrick De Haan, head of petroleum analysis at GasBuddy.
"California is relatively on its own when it comes to gasoline supply because it has its own blend of CARB-mandated fuel, whereas the rest of the country defaults to the EPA," De Haan told KTLA 5 Los Angeles April 18. "The problem right now with California is the supply of CARB-mandated gasoline has been plummeting down 27 percent in the last four weeks. That is attention-grabbing."
De Haan said California impacts prices throughout the Pacific Northwest and the West Coast because its numerous refineries supply gas to much of the region.
A growing ANS/Brent price spread As for the growing spread between ANS and Brent -- benchmarks which have of late been tracking each other closely -- the strong U.S. economy may auger for robust West Coast fuel demand while economies in the European Union are mixed.
The U.S. Federal Reserve has declined to lower its benchmark interest rates in 2024, citing a hot economy, but European nations are beginning to ease rates to stave off liquidity shortages.
The Swiss National Bank cut rates in March, while the Bank of England and the European Central Bank have signaled rate reductions beginning in June.
The Swedish central bank cut its benchmark rates on May 8.
The Swedish action may have been a catalyst for rising oil prices May 8, and for higher prices in Asian trading May 9 as Petroleum News went to press.
OPEC+ June production increase unlikely The Organization of the Petroleum Exporting Countries and allied producing nations may also factor into the May 8 price action.
Goldman Sachs Commodities Research analysts said in a note that OPEC+ is likely to extend crude output cuts in June, according to a May 8 Wall Street Journal report. The bank had previously anticipated that the cartel would announce a partial unwind of voluntary production cuts in June.
Recent surprise inventory builds have driven the bank's model to estimate just a 37% chance of an OPEC+ production increase in June, the WSJ said, adding that the analysts still expect Brent to remain in the range of $75 per barrel to $90 per barrel in most scenarios.
A surprise drawdown in U.S. crude inventories added additional fuel to the May 8 price boost.
U.S. commercial crude oil inventories for the week ended May 3 -- excluding the Strategic Petroleum Reserve -- fell 1.4 million barrels from the previous week to 459.5 million barrels, 3% below the five-year average for the time of year.
Analysts responding to an S&P Global Commodity Insights poll forecast on average a 300,000-barrel build in crude supplies.
Total motor gasoline inventories edged up by 0.9 million barrels for the period to 228 million barrels, 2% below the five-year average for the time of year. Distillate fuel inventories increased by 0.6 million barrels.
The SPR added 0.9 million barrels for the period to reach 367.2 million barrels May 3.
ANS fell 27 cents May 7 to close at $85.66, while WTI fell 10 cents to close at $78.38 and Brent fell 17 cents to close at $83.16.
On May 5, ANS gained 45 cents to close at $85.92, as WTI and Brent each gained 37 cents to close at $78.48 and $83.33 respectively.
ANS slid 65 cents May 3 to close at $85.48, while WTI dropped 84 cents to close at $78.11 and Brent slid 71 cents to close at $82.96.
From Wednesday to Wednesday, ANS was up $2.07 from its close of $84.05 May 1 to $86.12 May 8.
| 