Wednesday, January 15, 2014

Current state of US refining

Now the US has figured out how to get domestically produced crude out of the mid-Continent and all the way to the coast, but regulations restrict the export of crude, refiners are converting it as fast as possible to products, which are then legally exportable.  Refiner utilization is nearly maxed out in the dead of winter.  Come busier months, something will have to give.  Either refiners will completely max out 100%, causing crack spread to spike, or crude exports will have to be allowed, increasing the price of domestic crude and disincentivizing refiners to gobble through feedstock.

How do you profit from this?  Long products such as gasoline, short Brent.  Whether exports become unrestricted or not, you should win.