October 21 Diesel (CAD/L) (CAD/L) Diesel NYMEX Swap 6 ...

[Pages:2]Weekly Energy

Risk Management Solutions Group

January 16th, 2023

Hello,

After a tough start to the year, WTI crude oil rebounded last week, posting a strong weekly gain of over 6 USD/barrel to end the week at 79.86 USD/barrel. Indeed, China's improving demand outlook and cooling US inflation completely offset the largest crude inventory build since February 2021.

Chinese oil consumption is expected to hit a new all-time high this year as the world's biggest importer abandons its Covid Zero policy. Daily demand, which contracted last year, is expected to increase by 800k barrels/day in 2023 to a record of 16M barrels/day, according to a Bloomberg survey of 11 China-focused consultants.

EIA printed a massive inventory build of 19M barrels of crude oil added to U.S. commercial inventories. A massive build like that, especially coming in way above consensus expectations would normally be extremely bearish, but refinery outages, reflected in the low refinery utilization rate of just 84% (compared with 95.5% a month prior), played a big role in the build as facilities continue to struggle to recover from the December cold snap.

US diesel exports to Europe reached a two-year high in December, according to Vortexa data cited by Argus. The rush for Europe to stock up on diesel comes just a couple of months ahead of the European Union's full ban on Russian crude oil products set to begin on February 5.

U.S. oil refiner Phillips 66 predicted last week that the gasoline and diesel markets will be tight this summer, with refiners running at or near full capacity for months. The company also highlighted that 4.7M barrels/day of refining capacity has been lost globally.

Lyondell Basell Industries' 264k barrels/day Houston refinery is scheduled to close by the end of this year, further reducing U.S. capacity. The loss will, however, be mitigated by the planned expansion of Exxon Mobil's Beaumont, Texas, refinery's coming on-line that will add about 250k barrels/day capacity.

According to Baker Hughes, there were 623 active drilling platforms in the United States for the week ended January 13, an increase of 5 from the previous week.

Have a great week!

Products WTI (USD/Barrel) Brent (USD/Barrel)

Today January 16 2023

79.07

84.43

Week ago January 09 2023

74.63

79.65

Variation 5.95% 6.00%

Year to date USD/bbl

-1.40% 130

-1.65% 110

Brent Crude Oil

WTI Crude Oil

NY Harbor ULSD (CAD/lt) Rack Diesel, Qc (CAD/lt) Rack Diesel, Tor (CAD/lt) Rack Diesel, Van (CAD/lt) RBOB Gasoline (CAD/lt) HH Natural Gas (USD/MMBtu)

1.1588 1.5800 1.3510 1.3320 0.8932 3.6590

1.0725 1.5583 1.3705 1.2990 0.8110 3.9100

8.04% 1.39% -1.42% 2.54% 10.13% -6.42%

-3.91% -6.26% -15.01% -8.21% 1.42% -18.23%

90 70 50 30 10

2018

2019

2020

2021

2022

2023

Swap Price Spot

NY Harbor ULSD (CAD/lt) 1.1588

3 Months

1.1296

6 Months

1.0863

9 Months

1.0636

12 Months

1.0494

24 Months

1.0123

Source: Bloomberg as of January 16, 2023

RBOB Gasoline (CAD/lt) 0.8932 0.9226 0.9365 0.9229 0.8986 0.8651

WTI Crude Oil (CAD/lt)

0.6673 0.6707 0.6732 0.6700

Brent Crude Oil (CAD/lt)

0.7124 0.7145 0.7129 0.7071

CAD/lt 2.00 1.70 1.40 1.10 0.80

0.6653

0.7019 0.50

0.6409

0.6813

0.20 2018

Rack - Quebec

Diesel NYMEX

2019

2020

2021

2022

2023

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