Leaky Pipes
Gas Prices soar! Canadian crude prices plummet and Cushing Oklahoma is getting sucked dry! This comes as crude oil speculators amass their biggest short position in five years!
Midwest drivers get a major price shock as gas prices skyrocket, jumping 30, 40, 50, 60, 70, 80, 90, cents per gallon depending on what station you were looking at, driving the national average up by 3 cents overnight! The main reason was the report that the largest crude distillation unit at BP's (LONDON:BP) 413,500-barrel-per-day in Whiting, Indiana, and refinery will require at least a month to repair.
Leaky pipes at this unit that has been plagued with issues since it was installed a few years ago is raising concerns of not only repairs, but being able to do it safely. Because these units are in place so the Whiting Refinery can process heavy Canadian crude, those prices plunged getting cut in half and falling below the cost of production. Bloomberg news reported BP's Ind. refinery cut rates as it searches for source of leaks forcing shutdown of biggest crude unit, 1 mo. to repair 235k Barrel a day refinery subtracting costing the Midwest a loss of almost 12 million gallons of gas a day! BP is in the market for Naptha from other markets to try to increase output while the CDU unit is fixed, but it will be hard to fill that void.
If that wasn't enough bad news for Canadian oil producers, a leaking Enbridge Pipeline is further backing up Canadian crude. Enbridge, according to Bloomberg, says that it expects to restart the Flanagan South on Thursday after it was shut following a leak in Shelby County, Miss., the company said in an e-mail. A parallel The lines, which together can carry more than 800,000 barrels a day, are part of a system that runs from Alberta to the U.S. Gulf Coast. A lengthy shutdown of that section could cause supplies to back up into Western Canada.
Crude also fell for a third week in a row reflecting strong U.S demand. The EIA reported that U.S. crude oil refinery inputs averaged over 17.0 million barrels per day during the week ending August 7, 2015, 46,000 barrels per day less than the previous week's average. Refineries operated at 96.1% of their operable capacity last week. Gasoline production increased slightly last week, averaging 10.0 million barrels per day. Distillate fuel production increased last week, averaging over 5.1 million barrels per day.
U.S. crude oil imports averaged about 7.6 million barrels per day last week, up by 393,000 barrels per day from the previous week. Over the last four weeks, crude oil imports averaged about 7.6 million barrels per day, 1.1% below the same four-week period last year. Total motor gasoline imports (including both finished gasoline and gasoline blending components) last week averaged 683,000 barrels per day. Distillate fuel imports averaged 118,000 barrels per day last week. U.S. commercial crude oil inventories (excluding those in the Strategic Petroleum Reserve) decreased by 1.7 million barrels from the previous week. At 453.6 million barrels, U.S. crude oil inventories remain near levels not seen for this time of year in at least the last 80 years. Total motor gasoline inventories decreased by 1.3 million barrels last week, but are in the middle of the average range. Both finished gasoline inventories and blending components inventories decreased last week. Distillate fuel inventories increased by 3.0 million barrels last week and are in the middle of the average range for this time of year. Propane/propylene inventories rose 2.4 million barrels last week and are well above the upper limit of the average range. Total commercial petroleum inventories increased by 5.6 million barrels last week.
Total products supplied over the last four-week period averaged 20.4 million barrels per day, up by 3.2% from the same period last year. Over the last four weeks, motor gasoline product supplied averaged over 9.6 million barrels per day, up by 6.6% from the same period last year. Distillate fuel product supplied averaged over 3.7 million barrels per day over the last four weeks, down by 5.4% from the same period last year. Jet fuel product supplied is up 0.2% compared to the same four-week period last year.
Gold demand fell hard! Market Watch reported that vital buyers in Asia lost their appetite for the metal, the World Gold Council. Of course that could change after the China delegation. Demand for the precious metal weighed in at 914.9 tons between March and June of this year, down from 1,038 tons during the same period in 2014, according to the industry body's latest Gold Demand Trends report.
"This has actually been a challenging quarter; you've [the] evidence in the data," said Alistair Hewitt, head of market intelligence at the London-based World Gold Council. The decline came as global demand for jewelry fell by 14% in the second quarter to 513.5 tons, compared with 594.5 tons the year before. Jewelry makes up about 60% of global gold consumption.
A rise in equity purchases and expectations of a rate increase by the Federal Reserve sapped global demand for gold, an asset that doesn't pay interest and struggles to compete with other assets that offer a return and are deemed safe, like U.S. Treasury bonds.