WTI crude pricing has escalated significantly over the past two weeks, rising 2.7% or approximately $1.25 over the period.  A fluctuating US dollar, weather related refinery production interruptions and the remote possibility of an OPEC agreement on a production freeze all served to influence market price over the past two weeks.

With regard to refined products, a distinct escalation of both gasoline and distillate prices has been noted over the period.  Refinery interruptions due to flooding and other unscheduled issues effectively shut down approximately 1.6 million barrels per day of production.  During the period, DOE documented gasoline inventory reductions and a reported YoY increase in gasoline consumption of 2.3% combined to exert upward pressure on wholesale prices.  Additionally, market concern over potential production interruptions due to hurricane activity impacted wholesale purchase patterns and ultimately market price.  The onset of winter in South America resulted in increased exports of distillates to that region.  Additionally, the bidding up of RIN trading values made it more attractive to export distillate production thus impacting domestic pricing.

On the positive, refinery issues and storm risk are the primary reasons for the pricing escalation observed in recent days and both issues are subsiding, which should result in price moderation.  Additionally, high market prices should attract offshore imports again ultimately leading to lower wholesale pricing.

Economic Data:

1.  Platts Inventory Update:

The US Energy Department ("DOE") weekly petroleum inventory assessment, issued August 24, 2016, reported an increase in US crude stocks of 2,501,000 barrels.

US gasoline inventories increased by 36,000 barrels over the previous reporting period.  
 
US distillate inventories increased by 122,000 barrels.  

US refinery utilization rates decreased by 1.0% to 92.5% of capacity.