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Short-Term Energy Outlook

Release Date: October 10, 2018  |  Next Release Date: November 6, 2018  |  Full Report    |   Text Only   |   All Tables   |   All Figures

Petroleum Products

Gasoline prices: The front-month futures price of reformulated blendstock for oxygenate blending (RBOB, the petroleum component of gasoline used in many parts of the country) settled at $2.10 per gallon (gal) on October 4 (Figure 6), an increase of 11 cents/gal from September 4. The RBOB–Brent crack spread (the difference between the price of RBOB and the price of Brent crude oil) decreased by 5 cents/gal to settle at 9 cents/gal during the same period.

The RBOB–Brent crack spread declined as RBOB prices increased less than crude oil prices despite high gasoline demand in September. U.S. gasoline consumption combined with exports totaled 10.1 million barrels per day (b/d) for the four weeks ending September 28, which, if confirmed in monthly data, would be the highest on record for September. However, gasoline production and imports have more than kept pace with demand, resulting in gasoline inventory levels that were much higher than the five-year (2013–17) range on September 28.

Figure 6: Historical RBOB front-month futures prices and crack spread

Ultra-low sulfur diesel prices: The ultra-low sulfur diesel (ULSD) front-month futures price settled at $2.40/gal on October 4 (Figure 7), an increase of 15 cents/gal from September 4. The ULSD–Brent crack spread (the difference between the price of ULSD and the price of Brent crude oil) declined by 1 cent/gal to settle at 39 cents/gal during the same period. The ULSD–Brent crack spread has been at or higher than the five-year average for most of 2018, but large U.S. distillate inventory growth in September resulted in a ULSD crack spread less than the five-year average. ULSD crack spreads are also declining in Northwest Europe. Rising gasoil inventories in the Amsterdam-Rotterdam-Antwerp (ARA) trading hub may have contributed to lower ARA ULSD-Brent crack spreads. Low water levels on the Rhine River hampered product movements inland and may have contributed to the increase in ARA inventories.

Figure 7: Historical ULSD front-month futures price and crack spread

U.S. distillate inventories:

U.S. distillate inventories increased by 3.0 million barrels for the four weeks ending September 28, an unusually large build for September. For the first time in 2018, distillate inventories at the end of September nearly equaled those of the prior year (Figure 8). High throughput at U.S. refineries contributed to record-high distillate production for the month of September. Distillate production has set monthly records since June, which has supported inventory growth despite strong consumption and export demand. U.S. consumption and exports combined for the four weeks ending September 28, if confirmed in monthly data, would be the highest for September since 2015.

Figure 8: U.S. distillate inventory

U.S. Petroleum and Other Liquids
  2016201720182019
Crude Oil prices (dollars per barrel)
WTI Spot Average 43.3350.7968.4669.56
Brent Spot Average 43.7454.1574.4375.06
Imported Average 38.7048.9864.5266.02
Refiner Average Acquisition Cost 40.6950.6867.5668.55
Retail prices including taxes (dollars per gallon)
Regular Gasoline 2.152.422.792.85
Diesel Fuel 2.312.653.203.21
Heating Oil 2.102.513.053.18
Production (million barrels per day)
Crude Oil 8.839.3510.7411.76
Natural Gas Plant Liquids 3.513.784.364.80
Fuel Ethanol 1.001.041.051.03
Biodiesel 0.1020.1040.1270.144
Consumption (million barrels per day)
Motor Gasoline 9.329.339.329.32
Distillate Fuel Oil 3.883.934.124.16
Hydrocarbon Gas Liquids 2.542.642.923.04
Jet Fuel 1.611.681.731.78
Total Consumption 19.6919.9620.4120.64
Primary Assumptions (percent change from previous year)
U.S. Real GDP Growth 1.62.22.92.8
Heating Degree Days -5.1-1.210.8-1.5
Distillate-weighted Industrial Production 1.63.03.22.6

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