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Why crack spreads for refined oil products have NOT peaked?

Author: valueguru   |   Latest post: Fri, 6 May 2022, 10:58 AM

 

Why crack spreads for refined oil products have NOT peaked?

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To those who think that crack spreads for refined oil products have peaked, the below links will make you think twice.  Unfortunately, you can’t read all articles fully because some of them need to subscription. 

Quote from the first link “Diesel is today more expensive in America that it was in 2008, when the price of crude oil surged to nearly $150 a barrel compared with little more than $100 currently.” If you have access to the latest article from the Economist (link here is not full article), it’s a good read and the last link tells you why Pakistan is in such a bad position (surging demand but decline in local production).

https://www.qcintel.com/article/cracks-to-remain-strong-as-refining-capacity-has-run-out-morgan-stanley-5750.html

https://www.washingtonpost.com/business/energy/us-east-coast-diesel-supply-is-running-on-fumes/2022/05/04/1ef4623e-cb83-11ec-b7ee-74f09d827ca6_story.html

https://global.chinadaily.com.cn/a/202205/05/WS62733764a310fd2b29e5ab96.html

https://www.economist.com/middle-east-and-africa/2022/05/07/why-fuel-shortages-are-spreading-across-africa

https://www.thenews.com.pk/print/955455-refineries-output-drops-27pc-in-9-months

So how did the world get to the current situation?

  1. Russia Ukraine war.
  2. Lifting of covid restrictions.
  3. ESG – we shut down more capacity than we built and no new plan for significant capacity increase. A refinery takes years to build but need to think twice building a new one (world is aiming to phase out fossil fuel in the future right?)

These are facts currently playing out and I see no good solution in the short to medium term.  

Have a good weekend everyone!

 

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probability i was not aware of point no.3, thanks for sharing
06/05/2022 11:36 AM
Sslee Singapore Mogas 92 Unleaded Platts Brent Crack Spread Swap Futures Sep '17 (I1BU17)
N/A N/A (N/A) N/A [NYMEX]
for Wed, Dec 31st, 1969GO TO:
Futures Prices
View All Filters

Latest futures price quotes as of Fri, May 6th, 2022.
Contract Last Change Open High Low Previous Volume Open Int Time Links
I1BK22 (May '22)
27.556s
+0.091
N/A
27.556
27.556
27.465
N/A
335
05/05/22
I1BM22 (Jun '22)
24.489s
+0.302
N/A
24.489
24.489
24.187
N/A
335
05/05/22
I1BQ22 (Aug '22)
19.840s
+0.652
N/A
19.840
19.840
19.188
N/A
100
05/05/22
I1BU22 (Sep '22)
17.468s
+0.639
N/A
17.468
17.468
16.829
N/A
50
05/05/22
I1BV22 (Oct '22)
12.297s
+0.645
N/A
12.297
12.297
11.652
N/A
50
04/27/22
06/05/2022 1:56 PM
qqq3333 who can vouch such crack spread prices are reflective of reality? or is it some low volume irrelevant gambling instrument divorced from reality?
06/05/2022 4:10 PM
qqq3333 I am happy stick with HS Plant.
06/05/2022 4:11 PM


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