Trends, Cycles, and Kinks

Kinks: Changing Trends

•Demand growth prospects change sharply

•Crude-based distillate will grow more than gasoline

•Atlantic Basin gasoline surplus

•Oil sands – GHG and light-heavy price uncertainties; but US looking for heavy

•Margins – Not likely to return to high levels in mid term


	SDemand growth issues:
		–Recession (and missing rebound on distillates)
		–Potential energy policy impacts
		–Gasoline will be in surplus no matter what
		–Distillate export opportunities
	SCrude supply issues
		–Declining heavy sour (Mexican and Venezuelan)
		–PADD III now needs Canadian dilbit – Dilbit had been looking for a market, and now the market needs it. But Canadian production estimates have been pulled back significantly
	SRefining capacity
		–Will be in excess in Atlantic Basin in midterm
		–Closures are occurring
	SMargins – Not likely to return to high levels in mid term.