Refinery Turnarounds, Switch to Summer Blends and Market Speculation Driving Price Spike

Link to article: https://stillwaterassociates.com/refinery-turnarounds-switch-to-summer-blends-and-market-speculation-driving-price-spike/

February 5, 2013

The average price for retail gasoline in Los Angeles yesterday was $4.03, 23 cents higher than the price last Monday of $3.77. It’s typical this time of year for retail prices to rise, but this price spike is unique because prices have jumped so high so quickly. There are three factors driving this price spike. First, it’s “turnaround season,” the time of year when many refineries slow down production to perform scheduled maintenance. This is also the time of year in California when refiners transition from winter to summer gasoline blends. Refiners can’t make as much summer blend as winter blend so there’s less gasoline in the market. Finally, speculation in the crude oil and gasoline futures markets is intensifying the issue nationwide. The price of WTI started rising in mid-December from around $87 per barrel to a high of nearly $98 on February 3rd, dropping yesterday to $96.

You can see Dave Hackett discussing this issue on CNN this afternoon between 3 and 4pm Pacific.

Categories: Wisdom from the Downstream Wizard