Stephanie Yang, Wall Street Journal, has a nice piece on refinery economics, here…
“Unusually, the low prices aren’t deterring U.S. refiners from producing more gasoline. That is because the prices of other oil products such as diesel fuel and heating oil have soared, thanks to cold weather in the U.S. and new environmental regulations coming into effect in 2020 that are leading to higher diesel demand.
When refiners can make significant sums selling diesel and heating oil, known in the industry as distillates, they become less sensitive to the profitability of each barrel of gasoline, which typically accounts for around half of U.S. oil use.
“People are running for distillate and storing the gasoline,” said Greg Garland, chief executive of Phillips 66 , in November.”
Here is a look at gasoline and diesel values relative to Brent… Note that Brent is running at +$8 over WTI…
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