Will Spring Breakers Boost Refinery Utilization?
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Nowadays many college students and families in the United States are heading to the beach and other vacation destinations for Spring Break. How extensively will their travels affect processing rates at U.S. refineries? That is one of the barometers an informed market-watcher will be paying close attention to this week. Find out other indicators to monitor, along with other perspectives, in this preview of what to watch this week in the oil and gas markets.
Jon Donnel, Managing Director, B. Riley Advisory Services: Over the next week we will be watching some typical macro indicators for crude prices. Will refinery utilization rise in response to incremental demand driven by Spring Break travel? Where will import volumes trend in response to the swing in commodity prices? Will the frac spread count continue to grow after fully recovering following the February freeze? On the headline front, we will be keeping tabs on Europe as a number of countries have reversed course on the prior AstraZeneca (NASDAQ: AZN) vaccine ban in hopes to get more citizens inoculated to help halt the spread.
Samuel Indyk, Senior Analyst, uk.Investing.com: I’ll be looking out for whether U.S. crude oil inventories increase for their fifth consecutive week as the prolonged impact of the Texas refinery outages continues to affect the data. The increase meant total commercial crude inventories were above 500 million barrels for the first time this year. I’ll also be watching for an increase in gasoline and distillate which both showed builds for the first time since the February cold snap.
Tom Seng, Director – School of Energy Economics, Policy and Commerce, University of Tulsa’s Collins College of Business: Just as “what goes up, must come down,” “what goes down must come up.” The huge fall in oil prices will no doubt result in “bargain” buying and position “squaring” in the coming days. The market will be watching for any news of the spread of the COVID-19 variants, which could reverse the gains made by the widespread distribution of the vaccine. Additionally, with the lower oil prices, will OPEC+ change their strategy of “holding the line” on output? U.S. oil producers have continued to exercise constraint, and these lower prices will be a disincentive to increase E&P activities.
Winter may be over for natural gas as we continue to move towards April, but “summer” reinjections should lend some support to prices for the April-October period.
Mark Le Dain, vice president of strategy with the oil and gas data firm Validere: Year-over-year prints on gasoline demand and air travel are looking great and this should continue. Pent-up demand seems on track to even eclipse gasoline demand records in the U.S. during the summer.
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