Slide 12 of 18
Notes:
- Will production be high enough this fall to bring stocks back into the normal range?
- Last winter, production was cut back in December, which, when combined with the strong increase in demand, resulted in the large strong stock draw. But this did not diminish the typical production decline that occurred in January, leaving stocks precariously low.
- As December began, margins were low, and November weather had been 16% warmer than the prior year.
- Stocks were in the normal range, and companies were still smarting from the extremely low margins of the prior winter.
- Refiners reduced production to the prior year’s levels as a result.
- When the cold spell hit the Northeast at the end of January and caused prices to spike, production rebounded in response. However, increased imports were the main source of supply increases following the price spike.
- Production is projected to increase about 220 MB/D or 6.5% this winter. Distillate production can be increased by increasing crude oil inputs to refineries -- which increases all product production -- or by increasing distillate yields, which results in a switch in volumes between products. A higher distillate yield means higher distillate production but lower gasoline and/or jet fuel production.
- The forecast distillate production this winter is increasing over last winter mostly due to increased crude oil throughputs of about 525 MB/D, although yields are also assumed to increase.
