Slide 9 of 30
Notes:
- Winter of 1998-99 saw very low distillate margins as inventories were overflowing in products as well as crude oil and prices were extremely low. The low margins discouraged production.
- As we entered the winter of 1999/2000, inventories were still relatively high and margins had not recovered. As production was discouraged, inventories began to erode. A very large draw in December due to low production and a brief demand surge, possibly from Y2K, brought inventories well below normal, but margins still were not responding strongly, so neither was supply.
- A brief cold snap in late January essentially used up the available inventories in the Northeast, and prices soared as no supply was nearby. Supply eventually did arrive, resolving the problem.
- As we entered this winter, inventories were very low and margins were quite high, which resulted in a very different production and import picture than in the previous winter.
- Fortunately, we are finally seeing inventories moving sideways rather than falling and they are getting back into the normal band -- a situation we have not seen for a while.
