Commodity Research Group (CRG) is an independent research consultancy specializing in base and precious metals, as well energy products. The Group provides research and general price analysis for these markets, along with advice to companies seeking to construct hedging strategies.
In this podcast, oil market experts Andrew Lebow and Jim Colburn discuss key fundamental forces driving oil prices in both the futures and options markets.
About Your Hosts
Andrew Lebow has been involved in the energy derivative area since 1980. He began his career with Shearson Lehman Brothers where he worked in the initial formulation and marketing of the NYMEX WTI crude contract in 1983 as well as the NYMEX gasoline contract in 1985.
Mr. Lebow has appeared before the State Government of Alaska as well as the State Department of Defense to discuss hedging techniques. Mr. Lebow is also well known as a market analyst and is quoted frequently in the financial press. He has appeared on television on CNBC, NBC, CNN, CBS, and PBS. Mr. Lebow holds a BA from Lafayette College and an MBA from the Kellogg School of Management at Northwestern University
Jim Colburn is a futures and options professional with 30 years of wide ranging experience in commodity markets. For much of his career, at Man Financial (1989-2011) and Jefferies LLC (2012-2013), Mr. Colburn worked with major integrated oil companies, hedge funds, pension funds and other entities to develop market hedging and trading strategies.
He has conducted trading, hedging and risk management workshops in energy markets worldwide.
Mr. Colburn is a published author on options trading, hedging, market making and risk management. In 1986, while at the New York Mercantile Exchange, Mr. Colburn helped develop new markets in energy option contracts by educating the oil industry, banks, floor traders and brokers, worldwide.
This is Jim Colburn of commodity research group. I’m with Andy Lebow also of commodity research group and we’re here to talk about energy markets along with Ed Meir. Andy and I founded commodity research group, which consults on various aspects of commodity markets. Check out our website, commodity research group.com where we post our blog and our podcasts.
We’d also like to thank our good friend Doug Stetzer of EKT interactive oil and gas training for hosting this podcast. You can check out his daily newsletter, podcast and learning firstname.lastname@example.org and finally, the disclaimer.
This podcast should be construed as market commentary, merely observing economic, political, and market conditions and is not intended to refer or endorse any particular trading system. You’re not responsible for trading decisions taken by anyone, not intended to listen. And information is not guaranteed accurate. This is not an offer to buy or sell any derivative. Today is January 15th. Good Morning Andy.
Good Morning Jim. How’s it going? It’s gone good.
Uh, and our last podcast and December, um, prices have moved up quite sharply. Um, why don’t you talk about, once you get us up to speed, what happens? You know, why are we up so much?
Well, we had a big rally on, uh, on the nearby, uh, and, uh, definitely a help to drag up the track up the deferred. So although the market went into a much steeper backwardation, which we’ll talk a little bit more about, uh, as we head into the, uh, into the podcast. And, uh, basically I think a number of things happened to, uh, help the market make, uh, make new three year highs here.
Uh, number one, we did have some supply cutoffs late last year from the brand field and, uh, also from Libya, uh, which probably cut off, uh, between the, both of them at one point, a couple of hundred thousand barrels a day, if not more. Um, both of them, however, have been, uh, have been repaired. But I think that helped to a support price late in the year. And, uh, really the, the big, uh, not really a development but, uh, I think is the major fundamental has been a continuing drawdown of inventories, particularly in the u s uh, crude stocks.
We had said in our last podcast, we thought crude stocks withdraw very sharply in a US crude stocks would draw very sharply in December. I was thinking it’s going to be like 15 to 20 million. It ended up being down 30 million in December, which is, that’s a big number. And uh, globally, uh, you know, looks like stocks are a, are continuing to draw. So, um, you know, things are definitely, uh, coming into play for a OPEC. And I do want to talk a little bit about what’s going to happen to inventories here over the next couple of, uh, over 2018. And uh, finally, uh, OPEC continues to, uh, hold steadfastly both OPEC and the oil line. OPEC in terms of compliance have done an unbelievable job, somewhat helped by geopolitical problems and political problems in Venezuela, but a, their compliance numbers are just outstanding.
Um, let me just take a couple of points. The forties pipeline is back or they still pack that’s back. And uh, one thing runs. Uh, we’re at record levels for the fourth quarter. Is that correct?
Uh, and I think that’s, uh, you know, the reason stocks have drawn so, uh, so dramatically, uh, at least here in the u s and a and abroad as well, global stocks are drawing these stocks are, are drawing a, his demand to Manson. Unbelievable. I think we spoke again in our last podcast, a gym you at, you had asked me what I thought about the IEA number for fourth quarter. I said it was too low. And I think that’s true. I think fourth quarter demand has been, uh, has been really good.
And I, I was thinking that the record runs where a ketchup from the hurricane when so many of them were knocked out. Definitely. Definitely. That’s part of it. But I mean, isn’t it also the demand remains quite strong.
Yeah. We have to rebuild product stocks. We still haven’t quite done that. Uh, from a Harvey and export demand from the U S is a really, really just flowing and going still. So a runs what we’re at record levels. Margins were good, you know, for December they would, they were pretty strong. So, so run state well above for December. They weren’t, they were record, I mean way above, way above what I had thought. The last, I think the last, um, the last number was 17 six, which is just, you know, way off the chart.
The charts. Exactly. Um, you mentioned Venezuela. There was a story recently in plats that uh, just just paid today a dismal picture. They’re talking about 1.7 production in December. That’s $100,000 less than November. We’re talking about refineries. Uh, I think it was the, uh, what was it? Power Guana w w running at 35.2%. They talking about, you know, workers and not wanting to show up because uh, you know, the, the investments for a safety haven’t been made. So what is that overdone or what do, what do you think about the is is Venezuelan and I’m continuing to deteriorate? What are you seeing?
It’s hard to trace a scenario where they’re going to, where the lack of it deteriorate on. Fortunately, I mean today, the minister or the head of Pedevesa said their production was up, uh, in December. I that caught, that contradicts everybody’s view and he says that production is going to rise in 2018 but chimp, you just mentioned all the factors that are, uh, going to really inhibit as well and production from, uh, doing anything else but a declining at best.
And I think we at best it stays steady. Uh, uh, you know, I think Reuters had them at 1.8 others have the Meth, uh, 1.7, which is down three to 400 from last year. And that’s a big, that’s a big factor for, uh, you know, obviously for the western hemisphere but also for OPEC because as Venezuelan production goes down to the technical and political issues due to due to the sanctions here in the u s obviously it makes it easier for OPEC to, to comply with their, um, with their pricing, with the production, uh, agreement that they made in 2016.
Okay. So let’s, um, I just want to move over to a world demand. We were talking about how strong it is and the Eia came out, uh, was it last week and their, their estimate for what for 2017, they have, um, world demand up 1.4 million barrels for 2018 they showed up 1.7, which is a huge increase. Um, the IEA on the other hand, which comes out, they’re there, they’re new estimate comes out later this week, but last month they had it actually going down from plus 1.5 and 2017 to 1.3 in 2018 and I think one of the OPEC ministers suggested a number of 1.5, which is probably what you like to do is average the three, uh, which would give us a 1.5 members. So I’m interested on that EIA number of 1.7. I mean, is that, is that really attainable? These thing?
I think, you know, we, we wrote in our uh, outlook, um, which is coming out. This is our, our um, monthly, which also is an annual, we were looking for, right? An average of about 1.5, four, 5 million barrels a day growth and yeah. Yay. I think, I’m not sure where they’re at, where they’re coming up with the 1.7 number. I said, I think they’re really looking for a petrochemical demand to really search and they’re looking for big growth and a US demand led by ethane.
Uh, and I think that’s probably the, the different, well it’s a 400,000 barrel a day difference between the CIA and the uh, and the IEA. But I think the number’s going to be, you know, pretty close to a 1.5 and the IEA I think rightly pointed out, uh, in its last monthly, you know, you have to start thinking about what is the price do you let the less the city’s going to be as these as prices get, you know, have, have moved up here with Brent at 70 and Wti at, uh, 64.
Yeah, that’s a, that’s a good point. I think the, um, the EIA bumped up the US production number for 2018. I mean, I’ve probably based on price increases for one. Um, but they didn’t, they didn’t reduce demand, which is what the IEA did last month. They reduced Amanda Smidge because of, you said Iraq.
Now there’s also this income Alasta city. So if you’re, if you’re economies are growing, there’s an income effect, right? Especially in, uh, uh, the Nanos OACD countries. Um, but it’s offset by the price effect. So you, so there’s two things going on there. I don’t know how the EIA deals with, you know, did they, did they happen to, uh, update their world demand numbers at the same time they were looking at pricing increases in an offset? I don’t, I don’t know. But, um, it’s interesting that we’ll, we’ll, we’ll see the end of this week with the IAA
it comes up with, right? That’s coming out later this week. Yeah. I suspect there’ll be a little bit higher, you know, that, that they’ll get up to like 1.4, but, uh, maybe not. Maybe they’ll stay at 1.3
and, and the going, uh, let’s, let’s get into this u s oil production number. The, um, the EIA has us now for, for the entire year of 2018 at 10.27, they revised it up, I think was it a couple of hundred? Yeah. Upward revisions. And that’s for the entire year. So that was a big, that’s a big number, big number and a can that be done?
Yeah, I think it can be done. I think what they effectively did is, is put it around where many analysts have been, you know, I’ve been targeting like point of 0.9 to to up a million a day on the um, you know, for, for the annual growth. Uh, you know, cause they were too low. I think it’s 780,000 barrels a day, which was their last estimate. And I think most of the consensus is right around 900 to a million. Uh, some are looking for a 1.1, 1.2. And um, you know, I think that’s certainly doable.
You know, Jim’s, you and I have talked about all the hedge activities from going on in the, in the back of the curve. Uh, which, you know, may or may not, uh, mean that they’ll, there’ll be more, um, production activity light later in, uh, in 2018 but you also look at the drilled but uncompleted wells. You know, that’s over seven thousands. Uh, so I, I think that, I think 900 to a million is the right number. So I think the IAA is, is correct, is correct. It, and I’m
in last, in the weekly, uh, numbers that came out, we were down 290,000, uh, in oil production, 9.492. Um, from a 9.78 to number, um, it is a weekly number, a weather related obviously, but, um, you, you look back into the revisions, I mean it, can you talk about the monthly versus the monthly revisions versus the weekly numbers and, um, what, uh, what changes you’ve seen there?
Well, the, the always stiff. The weekly surveys are just really raw data. And, uh, you know, the, they oftentimes can be wrong. Uh, you know, you have to look at the weeklies just as a sort of an average. And I like the, like many people I look like I prefer the four week average to the, um, to the weekly numbers to just to give you an idea. But then what the AIA will do is they’ll take the actual data, uh, and revise them into, into the monthly’s.
Unfortunately there two months late, so you know, are too much afterwards. So you can have a big, big change, which they just did in October, uh, raising production way up from over the, from off of the weeklies. But you know, that two month lag, again, you know, it, it kind of makes the numbers more official. I’m not sure, you know, some market participants, particularly geeks like myself, you know, study them, study them furiously, and then go, oh my goodness, I can’t believe it. You know, the IAA, this, this and that.
Cause I think there’s only one, I think you’re the only one.
Yeah, I know it’s important, but, but the market really school, it’ll trade off those weekly numbers. Right. And then the noise, sometimes it shouldn’t. It really shouldn’t be because, you know, we’ve seen in the production numbers, you know, the, the monthly’s uh, you know, have changed pretty, pretty traumatically from, uh, from what the weeklies have done, both up and down, but you know, the weekly sort of the date of the moment and you look at it and they, and they trade on that and sometimes they’re looking at the wrong things.
Like this week, you know, I think the market knew that they were Freezeout and production was down, uh, because of weather problems, you know, in the mid continent. But, you know, nevertheless, you look at the headlines and people are all very bullish. Crude, crude production was down. Right,
right. Okay. So let’s just take a little turn here. Again, the market was up sharply in the financial funds. The speculator big specs have a, um, a big part in this move. And can you talk about what, how they’re
positioned in this? Oh my goodness. I mean you’re, you’re seeing, first of all, it’s, uh, you know, you look at the long to short ratio and Wti and it’s 13, the one I think that’s the most, just about the most I’ve ever seen and Brent is like 10 to one. So, you know, the market is way too long, but it has been, you know, it’s been over 10 to one here for um, you know, a few weeks. And I think, you know, we’ve been mentioning, oh my God, you know, the, the, the net length is just way too, too much, but it is, it really is. Well, that’s right. I thought at some point it has to get flushed. It just can’t, you just can’t keep, you know, 13 the one plus, let’s look at the gross numbers in Wti. The longs are 473. The shorts are only 35,000.
Yeah, that’s a huge skill. Yeah. I think, um, I was looking at this market and um, the, the 62 50 area for Wti front month 60 to 80, it was like a resistance. And I thought having all these funds that long, you’d see selling profit taking going into that, but it looks like they’re playing the breakout.
You know, it’s like the market, they’re, they’re adding to positions in it. Uh, not, not net net. So we’ll have to see how that develops. But it’s hard. It’s really hard to buy it up here even though there’s some fundamentally positive things going on. Um, when, like you said there, it looks like the funds are extended and over extended.
Yeah, I think it’s hard to buy it here too. I mean, obviously, you know, as we’ve mentioned, the fundamental, so are they’ve dramatically improved, uh, throughout 2017 as a credibly OPEC did say they would. And you know, they have, they have, um, you know, certainly it’s helped that the man this business strong to not, not even bailed them out, give them some support.
Yeah. OPEC agreements always seemed to do better when a demand is strong. The, the, can we talk about a EIA again? I’m just that, that number, there are numbers came out last week, so they’re, they’re fresh and I just want to go off on their stock levels. A 2017 they showed a decline of a point for this is for the world in 2018 and 2019 they have a slight build, so balanced but, but still on the build side and it’s just shocking to me to see that demand number pop up and, and to see them looking for a build. So,
okay. What do you mean? I have to tell you the, yeah, Yay. They have, one of the reasons they have the build number is they’ve got OPEC production, which is currently a like 32.3, uh, maybe lower than that. And um, you know, they have it for the year, a 32.7. You know, I don’t, I don’t really see that. I think because of Venezuela being a big factor there, you know, they’re saying Nigeria and Libya are going to be a, we’re going to be higher. So, so they are, um, OPEC production is way up and they also have us NGLs much higher.
You know, they have NGLs up half a million barrels a day on the supply side. Right. Um, uh, you know, I don’t think that that’s, that’s a big number. You know, I think most everybody else is like 0.2 0.3 up. So I think that’s why, you know, they have builds, uh, the IEA has a balance and OPEC has a pretty good draw in the, uh, in the second half of the year.
So again, like, you know, if you take the three together, you know, it looks like this is going to be a surplus in the first half of the year. Modest and then a pretty good draw, you know, because the opex numbers is pretty ambitious. But nevertheless, stock should draw in the, uh, in the second half. And, and you know, we think that it’s going to be a net draw this year of a couple of hundred thousand, but that, I think that’s the interesting point and why the market is, is um, you know, this 2018 is going to be a very interesting year because it’s balanced sort of on a razor’s edge and you know, the, there’s a lot of things obviously that can happen geopolitically, uh, as well as fundamentally that can change it in either direction.
Right. And I, you know, I think we focus on the, uh, the bullish factors, but when you think of something like what, what could sort of damp the bowls, I think maybe something like Chinese demand doesn’t, I think there’s like a point 300,000 barrel increase expected 300, 400,000 over, over last year.
Um, you think that’s a good number? You think that that’s at risk? I think, I think that’s a good number. I think the big, you know, the big thing that is just what OPEC does in June, uh, that could change the whole second half scenario, you know, OPEC, non OPEC. Um, because you know, I met, I had alluded to this at the beginning of the podcast, but if you look at the inventory numbers, the, um, five year average, which has been their big goal posts, oh, we got to get down to the five year average, they’re going to get there probably some point in this third quarter, you know, get to it or maybe even below it.
So, you know, again, at some of them will be dependent upon price, you know, where some market going to be as they head into June. But you know, if it really is overheating, they could say, all right, you know, we’re going to, we’re going to exit the steel.
Uh, the other factor of course is Iran, uh, and what happens with the nuclear deal, um, because even though, uh, it looks like we’re not reimposing sanctions now, uh, Trump left it open to that. That could be a factor later, you know, later in 2018. So, um, you know, that those are, that would be more bullish, but then be less, that’s, that’s going to be it. You know, we’ll be watching that. And would you say that Russia is chomping at the bit to produce more? Yeah, I think they’d like to get it.
They’d like to, I mean there are only a 300 that day, but certainly I think if the market looks like they were going to get to this five year average, um, they are probably going to be pressing pretty hard at the June meeting to increase production. And they, and they can do that. Yeah. I mean they, they may want to figure out how we’re going to exit the deal. Again, you know, it’s going to be priced determinant, you know, see where if prices are over, you know, Brent prices are in the 80s, you know, there’s going to be a lot of pressure for them to get out of the deal.
Right. Which, which some technicians are looking at as the projected I on this move, so it’s not in possibility. Um, let’s, uh, let’s kind of get back to the, uh, to the u s for a second. I just want to talk about crude oil exports and product exports. Um, it’s an amazing story for, for this past year at least they could continue as a going forward.
I don’t think we’re going to see is big growth in a, in product exports. I think, you know, we’ve, we’ve certainly for a gasoline, Mexico was, that was the big story. They had infrastructure problems and, and demand increases. Um, you know, it’s hard to predict what the infrastructure on plants are going to be for a Mexico, but, um, yeah, I don’t see that, that growing. I think overall gasoline exports will, will grow modestly and I think diesel exports, uh, we’ll also probably grow a modestly this more competition, uh, in, uh, for, you know, this Latin American markets.
But, um, yeah, I think it will continue. But nowhere near the rate that we’ve seen over the last couple of years. And crude exports doubled last year. They went from 500,000 to a million over a million barrels a day exports. Um, and that is going to continue to grow. I think that that’s going to be, um, you know, I’d see a hundred to 200 a day increased still on, uh, on exports. Part of that is from a low base. Last year, uh, in the first, uh, you know, in the first half of the year we had a record October, we export it over 1.7 million barrels a day. Unbelievable. You know, part of that is because of, you know, the,
uh, that OPEC didn’t produce. Right, right. Yes. Um, I’d like to take a quick, not too long of a, uh, uh, chat about the options world. Um, you know, we’re, we’re seeing, uh, uh, volatility around 17, 18%, and it’s, it’s just acting like it like it normally does when the market rallies or, uh, there’s, there’s balance in the marketplace. Volatility gets, uh, gets whacked pretty good.
You know, the long term average is 33, so we’re, you know, half of what we, uh, uh, normally I would, but it’s, you know, I don’t want to mislead you by giving you a longterm average because, um, this, the, the volatility implied volatility is not a stable concept. I mean, you could talk about mean reversion, but um, you know, we, we, we were trading a 12.7 is the low and that wasn’t 2000, June of 2014. And um, then when the market collapsed, uh, we, we, we reached 60.5 so, so it’s kind of all over the place and just because we’re low now.
So what I’m saying is if, if there’s any kind of OPEC leakage or, or, uh, the OPEC falls apart for some reason. Not that I think that’s gonna happen, but, um, in the prices come off hard, you’ll see, uh, uh, these viles explode volumes have been light. And then we think about where we were last year just just having, um, an OPEC agreements. And we were setting record a volume numbers in November, December, and it’s just, just the opposite now of I has been quite a light. And there, there are no, the biggest, uh, option, open interest is the DS 60 call with only 38,000. I think we were over, we were up around 60 last year at this time for the Ds, you know, the, the, the next year d 60 call. So, um, and, and on a put side, there’s a, you’ve got to go to June.
It’s not front month stuff. That’s, I’m not the most open interest. Uh, so there’s no, there’s no fear and loathing showing up in the, uh, you know, any auction market. And I, and I probably said more than I need to say about that. Uh, you know, the, I will bring up the, the, the, the, the spread options. Um, the flat calls and March and April have about 24,000 open interest. That’s, that’s a big number for the, uh, for these, uh, uh, uh, so, so fed, fed march in March, April have about 20, 24, 20 a to 22 to 24,000 open interest on the flat call. So that’s giving, somebody bought that gives him the right to go to go long fed short march and Long March, Short April. So that’s been a pretty good, uh, uh, not sure what the, who, who paid what for it.
But that thing is a, it’s now in the money I believe. Right? Oh, big time. Yeah. And the, and the, uh, March minus 25 foot, I’m sorry, the March, April my is 25 foot is the biggest one was 31,000. So that’s where, that’s where that market was. And now that also we’re not, we’re not seeing the big volume trading that we saw say over the over previous years. It’s kind of dried up as well. Um, but people are starting to bump up, you know, instead of a minus 25 puts, you starting to see action and in mice 10 puts and you’re actually seeing a bowel or calls a trade going going out. But, um, so that’s kind of, um, I want to say anything more about that.
Um, what else? Uh, what do you want to talk about it? Let’s go. Let’s talk about prices going forward. Andy, what do you mean this is, we’re, we’re not in a trading range right now. We just blow it out. Yeah. So we’re in a bull. You mentioned that, um, it might be hard to continue this rally without a, um, a technical correction where our profit taking thing going on. But what do you think, uh, let’s say the next couple of months going forward?
Well, one thing is is stocks are going to rebuild. Uh, you know, that’s seasonal. We have turnarounds coming. Um, run server are because the turnarounds in which are a little, a little shallower, this fear that the usual year is still pretty healthy slate. Uh, we are going to start seeing WTI stocks rebuild and um, you know, there is still, there is still some concern. Oh there is concern over both gasoline and diesel inventories are rebuilding a little bit too quickly and early January before the turnarounds.
But um, or you know, through January, although I will mention we’ll never, we’re not going to get close to last year’s bloated levels in either one, but as Wti rebuild, um, over the next four to six weeks, I think, I think the market is going to, I think it’s going to stall, I don’t know, a price it’s going to stall exactly.
But, uh, you know, I do, I do think it’s going to stall and as it stalls and starts to give way, just the little, we got to get this length out. I mean that’s, that’s really, uh, you know, overhanging problems. So I would, it would, it shocked me to get under $60 now wouldn’t it all? Um, and then as we head into the, you know, into the second and closer to, um, you know, close to that June meeting, the market will be all over the place. But um, you know, I, I would, is there a chance that wt I trade 70 in the first half of this year? Yeah, I think there is.
So that’s a, you say below 60. What about below 50? Would you be shocked to see that in the next couple of months?
Uh, yeah, I think that that would be a tough one. Below 50 would be, would be tough given where we are fundamentally, um, things would have had to change. I mean OPEC would have to exit the deal, I think a very prematurely to get it under 54 in the first half of the year.
Yeah. And the safety, I’ve always had problems with the CFTC numbers. One is because they’re, they’re late. So there you got them on Friday, but they’re, as of the previous Tuesday and a lot of price action can take place in and it’s a positions of change. But also, um, they used to, they used to break out the, uh, the passive long only a stuff. And I, and I think they roll that into, um, the, the large, they call, I think they call it manage your money. So I think that rolls in their nose and those folks can be, you know, they can have, um, a strong hands.
They, these are, these could be pension funds that, you know, they’re not trading this stuff. So you can’t, you can’t shake them out. You know, there’s, unless they have a committee meeting in a year or month or quarter or whatever, uh, and they decide, okay, we’re going to pull back.
But, but, um, so, so, so some of that length I believe is uh, and, and for a pension fund, it’s kind of, it’s not even a speck. It’s kind of a hedge, you know, is it rice small post supposedly, supposedly is this. Yeah. Right, exactly. The hedger laters but, um, but you know, the idea is that it’s not, it’s not fast money going in and out. So, um, you know, some of that increase that we see, uh, could, could be in strong hands. So you don’t, you know, you see some flushing enough to drive it down but not out of total collapse.
Right. Well I think should we, we’ve often said over the many years that we followed the smart market, cause I’m going to make a point here that when you look at the total short number, 35,000, right? You got to say, no one is short. This market, when that’s the case.
Yeah. You can’t write you, you can, right. It’s really hard to add. Right. You know that these at these levels. And the other thing though, I’d have to say against that, as we, when we watched the manage money come in, we always think that, okay, all the managed money is in, and then you see there’s more managed money to come in and say, who are these guys? Remember back in the 90s, it just exploded.
We, we, we used to talk about fading the funds and then they got so big, you say, okay, let’s do going. You have to jump jump aboard. Right. And do you, uh, do you want to get a w we recently, last few weeks we have seen some builds and in distillates despite a cold winter, maybe that demand a draw hasn’t,
yeah. I don’t know if that’s, if that’s, and yet it’s also, there is some, um, yeah, the, that is seasonal. You know, you look over the past few years when you do have a big bill, the end of December and a and into January, um, we’re, we’re in pretty good shape on diesel, you know, last year because of the warm weather. Uh, you know, that this slip market, the ruined the market for months. Similar to gasoline mean we had a big built, uh, you know, it took, it took the Harvey basically to get rid of it. Last year was not a great year downstream until, you know, Harvey really rocked, you know, downstream.
Uh, and I know it made many traders here, uh, you know, the downstream traders years and refiners to, uh, but you know, I think I see both diesel and gasoline pretty good in pretty good shape, but have to, we’ll have to, obviously we’ll be monitoring it.
So as far as a crack values go here, they’re pretty reasonably priced where we are now. I think diesel’s a little too high, you know that that’s going to come off it average, if you look at this year, the last three months were like over between 20 and 24, 20 and $25 just to crack the New York harbor versus Cushing. Uh, in 2016 that didn’t even get to $20. So it’s been, it’s been pretty high.
Yields of this litter are going to, yields are going to be higher. So it wouldn’t surprise me to see that that crack, uh, soften and uh, in our outlook, uh, in this month’s monthly from a commodity research group, um, you know, I think, I think we were saying it could get down. You know, we’d look for the crack to get down to 16, 17 on, uh, on diesel and gasoline.
You know, you’ve got winter and summer and summer. Great winters. Just about ending a, it should hold last year as long as of 10 easily. And this year it should be an okay year for gasoline. Not Great, but, okay. Very good. Any, anything else you want to say, Andy?
We’d go say, uh, we invite everybody to, if anybody wants to see a copy of our, uh, outlook, um, feel free to email email@example.com or Jim Colburn at Commodity Research Group, uh, dot com and I think that’s it. Very good. We’ll stop here and no, I will still talk to you next month. This is commodity research group.com.