The home heating oil industry has a long and proud history, and Fuel Oil News has been there supporting it since 1935. It is an industry that has faced many challenges during that time. In its 77th year, Fuel Oil News is doing more than just holding
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The Canadian Oil Heat Association presented its Delivering the Good Award at its annual conference in Moncton, NB, June 18-19, for individuals or companies that have been an outstanding example of leadership, service and/or technical expertise. Better late than never, receiving the award from Jonathan Beckett director of sales and marketing at R.W. Beckett Corporation (red shirt, Rt.) were Bill Gould, Jorge Klein and Rick Hineman. Fuels eIA N e W s 14 JANUARY 2015 | FUEL OIL NEWS | www.fueloilnews.com Distillate inventories in the Midwest (Petroleum Administra- tion for Defense District 2) were 21.9 million barrels as of Nov. 21, the lowest level on record since EIA began publishing weekly estimates for the region in 1990 (Figure 1). Inventories in the region typically draw down quite steeply in autumn, but this year's decrease was particularly pronounced due to the coincident timing of a large harvest, planned refinery maintenance and unplanned disruptions to refinery operations. With the harvest mostly complete, and refinery utilization rates returning to higher levels, inventories are increasing. As of Nov. 28, Midwest distillate inventories were 23.7 million bbl. Unlike the Northeast, where 24.7% of homes rely on distillate fuel for home heating, only 1.3% of Midwestern households use distillate fuel for space heating. In the Midwest, the seasonal uptick in distillate demand is related mostly to agricultural use. Much of the region is dedicated to farming and distillate fuel, specifically ultra-low sulfur diesel, is the primary fuel for farm equipment (tractors, combines, and harvesters). While PADD 2 is responsible for about 30% of total U.S. distillate consumption, it accounts for over 50% of national distillate use in farming. In the Midwest, ULSD consumption traditionally peaks in October with the annual harvest of corn, wheat, soy- beans, sugar beets and other agricultural com- modities. Last October, PADD 2 consumption of ULSD fuel, as measured by prime supplier sales volumes, reached 1.3 million barrels per day, more than 100,000 bbl/d above the prior three-year October average (Figure 2). The Department of Agriculture projects that this year's corn harvest, when complete, will be slightly larger than last year's and the soybean harvest is also expected to be near record levels. As a result, diesel demand driven by the harvest season is expected to be higher as well. Additionally, the anticipation of a larger corn harvest caused prompt corn prices to fall below prices for corn several months in the future (contango), encouraging farmers to harvest later in order to capture higher prices. This delay resulted in a concentration of harvest activity between Oct. 26 and Nov. 15, a period during which planned refinery maintenance and an unexpected pipeline disruption caused PADD 2 production of distillate fuel to decline. Refineries typically schedule maintenance when refined petroleum product consumption is low, i.e., in the fall and in the first quarter when there is less demand for transportation fuels. Midwest refineries had been running at record levels throughout the summer but began cutting rates in September, after the end of the peak summer driving season (Figure 3). PADD 2 refinery utilization dropped from 97.5% for the week ending Sept. 5 to 82.0% for the week ending Oct. 24. In addition to planned mainte- This Week in Petroleum excerpt (Dec. 3, 2014): After Hitting a Record Low before Thanksgiving, Midwest Distillate Inventories are Increasing