How can refineries run at more than 100%?

It’s a common cliché, the kind of thing that could be on a classroom poster: Give it 110%. Frequently said by athletes and business professionals alike, the sentiment sometimes causes others to wonder how it’s possible to give more than 100%.

That question may have come up again when the US Energy Information Administration Midwest (PADD II) refinery utilization rates greater than 100%, in the week ending in July 11.

In the week ending in July 25, EIA data showed the Midwest refinery utilization rate was 97.4%, down from two weeks ago’s all-time recorded high of 100.3%.

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The UK’s diesel addiction will get worse before it gets better

London mayor and prime minister hopeful Boris Johnson announced this week amid much fanfare a new levy on diesel vehicles entering the capital. This made it to the front pages of many UK newspapers, despite ongoing wars in Syria, Gaza, Iraq, Libya and Ukraine, underscoring the significance to the daily lives of many Britons.

The plan is to charge diesel vehicles entering London £10 ($13) on top of the existing congestion charge (£10-11.50) from 2020, presumably providing an incentive for switching to cleaner vehicles over time. The levy will only apply to vehicles that do not meet the Euro 6 fuel standard, which means most diesel cars built before this year. Petrol cars built before 2006 will also be affected by the policy.

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Montreal could become an oil export hub as markets continue to shift

Montreal has emerged as an export base for Western Canadian heavy sour crudes as prospects to construct new pipelines to the British Columbia coast, Eastern Canada and US fade.

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Energy trading volumes: what a difference a couple of months can make

In May, this blog looked at April data for crude oil trading on Platts market on close, or MOC, system, and saw a steep falloff in volumes of barrels traded in the Americas and in Europe, the Middle East and Africa.

The apparent cause of the decline in liquidity of these markets was the lack of volatility in prices. A Platts review of April numbers said that trading volumes in energy futures products had been “caught in a declining trend” as “major price fluctuations came to a standstill.” It said that volatility had “eerily decreased,” with standard price deviations down across oil and oil products.

Now, from the vantage point of late July, MOC numbers for April, May and June–in other words, for the second quarter–look quite different, even though volatility mostly remains at bay.

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EIA analysis: strong runs lead to a drop in crude oil stocks

The weekly EIA report showed a fairly sharp decline in crude oil inventories, led in part by strong refinery operating rates. You can see our analysis here. 

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Guest blog: Hamilton has it right on oil

Steven Kopits is the Managing Director of Princeton Energy Advisors, LLC.  He is currently writing a book on supply-constrained oil markets analysis.

Once again, we return to the debate over the direction of oil prices, this time led by the high price school.

In a recent article, Professor James Hamilton of the University of California argues that sluggish supply growth, coupled with sustained emerging market demand, will tend to keep oil prices elevated.  He writes, “the world of energy may have changed forever…hundred dollar oil is here to stay.”

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Energy Economist: The amount of oil the world uses, seen through different eyes

Counting barrels is always tough to do, as Ross McCracken discusses in this month’s excerpt from Platts Energy Economist.

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At the Wellhead: China struggles to open its energy sector to more non-state entities

China is shifting its focus on state-owned enterprise reform, but it still remains to be seen if the SOEs will make significant changes to the roles non-state entities can play. Song Yen Ling discusses China’s energy sector reform goals in this week’s At the Wellhead column from Oilgram News, and also takes a look at whether internal turmoil within China’s dominant upstream player is a hurdle to advancing projects.

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Australian Wolf stalks Mongolian oil opportunities

Mongolia might not be the first place that springs to mind as a potential investment destination for oil and gas players, but one small Australian company is hoping the recent passing of a new petroleum law will open up opportunities in the landlocked nation between Russia and China.

Wolf Petroleum is the only Australia-listed oil and gas company operating in Mongolia. But the industry minnow, capitalized at just A$5.5 million ($5.2 million), claims a position as Mongolia’s largest petroleum acreage holder, with one production block and two exploration areas covering more than 74,400 sq km (18,000 million acres).

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The last contango? ICE Brent futures curve breaks from backwardation

In early July, there was a shift in the ICE Brent crude futures market — the backwardation that market players had become accustomed to flipped into contango. Some even said the market “collapsed” into a “supercontango” in a way not seen since 2008.

A contango market suggests ample supply in the prompt market, as the futures price of a commodity is above the expected future spot price. The contango in the Brent curve seems to suggest fatigue in oil demand, some say.

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