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129 comments on Grangemouth/Forties Update: Forties pipeline remains shut down (Thread 2)
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Somethings odd here. Oil and gasoline (RB) futures have both traded down since it was announced that talks had broken down.
Buy the rumor sell the news?
The bearish event that ends the rally?
I'm unsure but would think this would be bullish for oil and gas prices, unless it is priced in. There was a sharp jump in Refinery utilization this week (81 to 85) - and that wasthe week ended 4/18 - might be as high as 90% now - perhaps we are gearing up to export refined product to UK?
In a recent report by Robert Rapier the US imports between 800,000 barrels and 1,200,000 barrels of gasoline per day, so I doubt we can export any product from our refineries. I do believe the US IMPORTS 50,000 or 60,000 barrels of gasoline per day from UK or Norway. Once the strike starts and shortages spread from UK the gas price would climb here as well. With strike the price of $4.00 is very likely by end of May, IMO.
By the EIA data Robert used, the U.S. imports about 69,000 bpd of gasoline from the UK, and 23,000 bpd from Norway (based on annual data).
Since gasoline prices in the U.S. have remained lower than they would be thanks to these imports, I think you're right. If those export levels from UK & Norway are interrupted for very long, it's going to pressure U.S. prices even more.
At this point I'm left to wonder how elastic those gasoline exports are...how much of what is being brought in from elsewhere to cover the loss from Grangemouth is gasoline, and how much is diesel?
On the other hand, if the Grangemouth outage persists, and UK gasoline prices rise sufficiently in response, it should cut back on their exports to the U.S., but it will also restore profitability for the U.S. independent refiners, and they should ramp up their output in response. Supply levels should be restored, but at higher prices.