- Oil was little changed this morning after losing most of last week’s gains yesterday
- Mar ’23 WTI gains 17c this morning to trade above $80/Bbl
- Although the market has recently been underpinned by hopes for a recovery in Chinese demand, there is still concern about how a global economic slowdown may affect demand
- According to a survey from S&P released yesterday, business activity in the United States contracted in January for the seventh consecutive month (Reuters)
- Meanwhile, the US dollar strengthened relative to its recent lows
- A stronger dollar (DXY Index) can cause foreign buyers of dollar-denominated commodities to pay less for the same amount of goods
- US oil refining margins hit a three-month high as refinery outages rise
- On Tuesday, the 3-2-1 crack spread, a crucial indicator of refiner profits that measures the difference between the price of crude oil and the selling price of refined products, hit $42.41, the highest since October
- High refining margins could be one of the leading indicators of higher gasoline and diesel costs
- The U.S. refining system was hit by winter storm Elliott recently, knocking out nearly 1.5 MMBbl/d of operating capacity in December
- Refiners are reportedly planning twice as many turnarounds (planned maintenance) this spring than usual, increasing pressure on fuel supply, according to data provider IIR and Reuters
- Moreover, inventories of refined products, particularly middle distillates, remain low
- Additionally, the EU’s sanctions on Russian fuel products are set to take effect on February 5, further limiting global supplies of refined products