While nominal to moderate fluctuations in crude prices have been noted over the past two weeks, a significant escalation in distillate and propane wholesale prices has dramatically characterized the period.

While Brent crude pricing has risen by less than 10%, WTI prices have crept up by slightly in excess of 4% (from $92.59 to $97.41) in reaction to 1) reduced DOE reported carrying inventories, 2) indications of an improved U.S. economy and 3) speculative activity.

Refined product wholesale prices and in particular distillates and propane have been significantly impacted by 1) increased demand due to cold weather, 2) reduced refinery output due to maintenance and weather related issues, 3) transportation/distribution infrastructure limitations, and 4) reduced inventory levels.

Refinery production on the Eastern seaboard was reduced to as low as 70% over much of the previous period, effectively reducing production at a time when cold weather patterns of an historic proportion impacted much of North America.  The interchangeability of ULSHO and ULSD meant distillate inventories were lowered to meet home heating demands.

With regard to propane, a variety of factors including:

1) increased demand related to the agricultural crop drying requirements;

2) increased demand related to abnormally cold weather patterns;

3) Sable Island gas platform production issues;

4) interrupted rail shipments from Central Canada;

5) increased Newfoundland demand due to temporary closure of Come-By-Chance oil refinery

have all conspired over past two weeks to exert an upward pressure on wholesale propane prices.