Crude prices continued to escalate over the past two weeks and continue to be driven by a combination of a weakened U.S. dollar and reduced import levels. Refined product prices rose in tandem due, in part, to the steadily increased cost of crude but as much, it would appear, by the dramatically reduced production runs of North American refiners. The refining industry in doing so has reacted to an irreconcilable market condition of increased crude or production costs in light of a reduced market demand for its product. The situation was highlighted this week when the largest U.S. refiner, Valero, reported an operating loss of almost $500 million over the past three months. Improved spot market pricing this past week (reflected locally in the form of higher rack prices) attracted increased imported product and provided some relief on Wednesday with rack prices reacting accordingly. The relief was short lived, however, as spot market prices resumed their recent upward trend again on Thursday.

Refinery yield: 81.8% (vs historical average of 90%+) 
Demand: Distillate demand down 13.3% on a four-week moving average vs last year.

• MasterCard Spending Pulse report released on Tuesday reported that U.S. retail gasoline demand last week rose 5.1% from a year ago. The four-week moving average of U.S. gasoline consumption climbed 4.7% year over year.
• Market Watch reports that China's oil demand grew by 14% in September and nearly 16% in August.

• Oil prices shot up on Thursday after the U.S. Commerce Department reported a 3.5% increase in third quarter gross domestic product, topping the average forecast for 3.2%. The figure revived investor confidence that the U.S. economy is emerging smoothly from recession.
• China announced on Wednesday that its economy grew 8.9% in the third quarter, building on recent improvements in industrial production, retail sales and commodity imports.