Slide 8 of 25
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 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 and caused prices to spike at the end of January, production rebounded in response. However, increased imports were the main source of supply increases following the price spike.
- Production is projected to increase about 180 MB/D or 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.
- Production is forecasted to increase over last year mainly as the result of increased crude oil throughputs of about 600 MB/D with yields holding at about last winter’s levels.
