While nominal to
moderate fluctuations in crude prices have been noted over
the past two weeks, a significant escalation in distillate
and propane wholesale prices has dramatically characterized
Brent crude pricing has risen by less than 10%, WTI prices
have crept up by slightly in excess of 4% (from $92.59 to
$97.41) in reaction to 1) reduced DOE reported carrying
inventories, 2) indications of an improved U.S. economy and
3) speculative activity.
Refined product wholesale prices and in particular
distillates and propane have been significantly impacted by
1) increased demand due to cold weather, 2) reduced refinery
output due to maintenance and weather related issues, 3)
transportation/distribution infrastructure limitations, and
4) reduced inventory levels.
Refinery production on the Eastern seaboard was reduced to
as low as 70% over much of the previous period, effectively
reducing production at a time when cold weather patterns of
an historic proportion impacted much of North America.
The interchangeability of ULSHO and ULSD meant distillate
inventories were lowered to meet home heating demands.
regard to propane, a variety of factors including:
increased demand related to the agricultural crop drying
increased demand related to abnormally cold weather
Sable Island gas platform production issues;
interrupted rail shipments from Central Canada;
increased Newfoundland demand due to temporary closure of
Come-By-Chance oil refinery
all conspired over past two weeks to exert an upward
pressure on wholesale propane prices.