Row 6454

Content Data

This page contains data entry 6454 from the Axioma AXP content repository. The structured data below represents the complete record for this entry.

Raw Record

{
  "text": "​\n\n10 May 2024 13:24:00  \n\n\nLONDON, May 10 (Reuters) - Biodiesel and other renewable diesel fuel oils are displacing a small but growing volume of petroleum-derived distillate fuel oil in the United States, especially in California and other parts of the West Coast.  \n \n\nThe result of this policy-driven change is that manufacturing and freight activity is correlated with total petroleum and renewable fuel oil supplied rather than just petroleum distillates alone.  \n \n\nDistillate fuel oils such as diesel and gas oil are overwhelmingly used in freight transport, manufacturing and construction, so consumption is closely correlated with the industrial cycle.  \n \n\nThe cyclical upturn has remained weak over the last six months, as manufacturers struggle with headwinds caused by high interest rates for expenditure on expensive durable items.  \n \n\nBut even if the recovery gains more momentum, the eventual increase in petroleum distillate consumption is likely to be smaller than anticipated as more demand is lost to renewable alternatives.  \n \n\n**Chartbook:** [U.S. distillate consumption and stocks](https://twitter.us18.list-manage.com/track/click?u=92fd2e3ec7962cda008f0732a&id=8a5f48a527&e=3bd9fe6e45)  \n \n\nThe volume of petroleum-derived distillate fuel oil supplied to the U.S. domestic market, a proxy for consumption, fell to 3.9 million barrels per day (b/d) in February 2024 from 4.0 million b/d in the same month in 2023.  \n \n\nBut this was offset by an increase in the supply of biodiesel and other renewable fuel oils to 0.3 million b/d from 0.2 million b/d, according to data from the U.S. Energy Information Administration (EIA).  \n \n\nTotal consumption of petroleum and renewable fuel oils has been flat over the last year, consistent with other signs that manufacturers and freight hauliers are struggling to emerge from a long but shallow downturn in 2022/23.  \n \n\nSubstitution of renewable fuel oils for petroleum-derived distillates is most advanced on the West Coast, where California has adopted [state-level regulations](https://twitter.us18.list-manage.com/track/click?u=92fd2e3ec7962cda008f0732a&id=919534c7fc&e=3bd9fe6e45) requiring minimum blending rates and usage.  \n \n\nOn the West Coast, the volume of petroleum distillates supplied fell to 370,000 b/d in February from 460,000 in the same month a year earlier and over 530,000 in February 2021.  \n \n\nOver the same period, the volume of renewable fuel oils supplied surged to 170,000 b/d from 90,000 b/d a year ago and less than 40,000 in 2021.  \n \n\n**DISTILLATE INVENTORIES**  \n \n\nThe shift from consumption of petroleum distillates to renewable fuel oils has been mirrored by a similar shift in inventories (“[Petroleum supply monthly](https://twitter.us18.list-manage.com/track/click?u=92fd2e3ec7962cda008f0732a&id=394d4174fc&e=3bd9fe6e45),” EIA, April 30).  \n \n\nU.S. petroleum distillate inventories stood at 118 million barrels at the end of February, which was 18 million barrels (-13% or -1.14 standard deviations) below the prior ten-year seasonal average.  \n \n\nBut petroleum distillates were supplemented by another 11 million barrels of biodiesel and renewable fuel oil stocks, up from 8 million barrels at the same time in 2023 and 7 million in 2022.  \n \n\nCombined inventories of petroleum and renewable distillates are 14 million barrels (-10% or -0.84 standard deviations) below the ten-year seasonal average, and broadly similar to levels in 2023 and 2022.  \n \n\nFrom the perspective of combined inventories, the production-consumption balance is only modestly tighter than normal.  \n \n\n**PRICES AND CRACK SPREADS**  \n \n\nThe relatively small deficit in combined inventories helps explain why diesel prices and crack spreads have softened in recent months.  \n \n\nThe expected acceleration in distillate fuel oil consumption and depletion of inventories has been repeatedly postponed as manufacturers have struggled to regain momentum.  \n \n\nInflation-adjusted spot prices for ultra-low sulphur fuel oil delivered in New York Harbor averaged just $107 per barrel in April 2024, down from $136 in September 2023 and a high of $205 in May 2022.  \n \n\nIn real terms, diesel prices have fallen faster than crude, with the diesel premium or crack spread narrowing to $22 per barrel in April from $46 in August 2023 and a high of almost $63 in June 2022.  \n \n\nThe inflation-adjusted spread has reverted close to the five-year average for 2015-2019 before the coronavirus pandemic and Russia’s invasion of Ukraine disrupted the market.  \n \n\nHedge funds and other money managers have reduced their combined position in U.S. diesel and European gas oil in eight of the most recent 11 weeks, selling the equivalent of 52 million barrels since February 13.  \n \n\nAs a result, the combined position had been reduced to 35 million barrels (34th percentile for all weeks since 2013) on April 30 down from 87 million (73rd percentile) on February 13.  \n \n\nFund positioning has transformed from bullish to mildly bearish as petroleum distillate inventories have depleted much less than normal for the time of year.  \n \n\nCurrent diesel prices and spreads indicate supplies are not especially tight, which has taken some of the heat out of the crude market as well, contributing to the retreat of Brent prices from their recent highs in early April. ",
  "label": "r/oil",
  "dataType": "post",
  "communityName": "r/oil",
  "datetime": "2024-05-10",
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}

Entry Information

• Entry ID: 6454
• Repository: Axioma AXP
• Dataset: arrmlet/reddit_dataset_36
• Total Entries: 100,000