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USWC Refiners Under Pressure from Low Margins: OPIS

OIL PRODUCTS

USWC distillate margins in July were around half of their levels in summer 2022 and 2023, OPIS said, cited by Bloomberg.

  • This puts margins at the lowest levels in the 2000s.
  • Jet fuel prices at LAX last week averaged a $10.37/b premium over WTI. It had fallen as low as a $9.09/b premium in late July.
  • By comparison, in 2023 jet fuel at LAX was WTI plus $31.77/b.
  • Adding pressure to cracks has been the price of Alska North Slope crude, pricing at a $5/b premium over WTI.
  • Diesel has also been sluggish, with USWC margins below $20/b over the summer, compared to $55.41/b in Aug. 2023.
  • Vast flows of renewable diesel supply into PADD 5 have displaced around 150k b/d of conventional diesel.
  • USWC diesel production has been 475k b/d, up 5k b/d on the year.
  • A lack of storage in the region is also causing volatility, OPIS said.
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