DISTILLATES Consumption of middle distillates will be the most affected by any cyclical slowdown because of their intensive use in manufacturing, freight transportation, mining, and oil and gas production.
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"The Middle East was not supplying as much distillates as they are now, and Russia is exporting more distillates," said KBC principal consultant Ehsan Ul-Haq of the changed market.
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The desk of distillates is aviation, is benzine, is gasoil.
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Product inventories for gasoline and distillates are still considered high.
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Stockpiles of refined products like gasoline and distillates also fell.
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Inventories of gasoline and distillates also increased, the API said.
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The plant produces mostly gasoline and distillates such as diesel.
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At the same time, refiners have prioritised the production of middle distillates used for road and railroad diesel, jet fuel and marine gasoil, at the expense of light distillates such as gasoline for motorists.
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The Pasadena refinery produces mostly gasoline and distillates such as diesel.
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Heavier crudes tend to produce a higher yield of middle distillates.
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Distillates, which include diesel, are expected to fall 1.8 million barrels.
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LONDON (Reuters) - Global oil markets are increasingly over-supplied with light distillates, such as gasoline, while there are not enough middle distillates, such as diesel, which has opened a big price differential between the two fuels.
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It briefly shut the distillates line as well, which transports jet fuel.
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Line 2 carries distillates primarily, while Lines 3 and 4 are multiproduct.
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I have to ask the responsible of the, it's called the distillates desk.
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He said global demand for distillates was poised to grow faster than gasoline.
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Gasoline is expected to fall 750,000 barrels and distillates, lower by 250,000 barrels.
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Distillates, which include diesel, were down 2.3 million barrels, both more than forecast.
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The unit, which processes fuel oil into middle distillates, was shut on Aug.
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Stockpiles of distillates, including diesel and home heating fuel, jumped by 4.6 million barrels.
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Refiners are getting a signal to shift the balance slightly towards distillates in 2017.
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While crude oil inventories fell, gasoline and distillates inventories rose more sharply than expected.
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The company said on Thursday its distillates line was not damaged by the blast.
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Now, middle distillates are expected to be used increasingly to meet the new restrictions.
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Other products made at the refinery include distillates such as jet fuel and intermediates.
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Stocks for middle distillates in Singapore rose by 776,000 barrels in the week to Feb.
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Stocks of middle distillates in Singapore fell by 212,211 barrels in the week to Feb.
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A triumvirate of draws for crude, gasoline and distillates is a supportive influence for prices.
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It was the biggest weekly build since January, putting distillates at six-year seasonal highs.
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The rules, known as IMO 2020, are expected to tighten supplies of distillates, including diesel.
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The rules, known as IMO 2020, are expected to tighten supplies of distillates, including diesel.
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That equates to about 2.5 percent of the entire 30 million bpd distillates market, Hardy said.
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Refiners had been running full-tilt for much of 13, encouraged by strong demand for distillates.
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It had since restarted Line 20, a distillates line, which was also shut as a precaution.
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The rule is widely expected to spur new demand for the distillates the refinery would produce.
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Of the refined fuel, 1.4 million barrels was diesel or distillates, and 636,000 barrels was gasoline.
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The build in gasoline and distillates overshadowed a much-bigger-than-expected draw in crude inventories.
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Meanwhile, stockpiles of gasoline and distillates, which include diesel and heating oil, rose more than expected.
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Some analysts have spoken about the possibility of "economic run cuts" to limit the production of distillates.
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Those products included middle distillates like jet fuel and heating kerosene, fuel oil and particularly U.S. propane.
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API figures showed a draw of 5.1 million barrels of crude and 3.1 million barrels in distillates.
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Stockpiles of distillates, which include diesel and home heating fuel, fell more sharply than expected, as well.
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U.S. refiners have an incentive to switch away from maximizing gasoline production and toward making more distillates.
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That's a problem because neither of those liquids are used to make middle distillates, Morgan Stanley says.
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Among oil products, demand for middle distillates - diesel and jet fuel - has taken the industry by surprise.
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They discovered a shared aversion to the grunt work of chemistry — beakers, distillates, titration, and so on.
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The U.S. East Coast typically imports middle distillates, including diesel and heating oil, to meet regional demand.
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Denver's Organa Labs, the world's largest cannabis oil producer, announced the release of Bakked distillates in October.
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Stocks of refined products have tightened, especially for middle distillates such as U.S. heating oil and European gasoil.
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The strength in margins comes despite expectations of rising imports of middle distillates from other regions supplying Europe.
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Since April, the structure of prices, stocks and hedge fund positions in distillates and gasoline has been reversed.
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At least four traders in the heavy distillates division have left, including manager Pino Petricone, the sources said.
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Analysts had expected distillates to draw by just 232.5 million barrels and gasoline to decline by 233 million.
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The gasoline oversupply has presented refiners with the unusual dilemma of whether to switch summer output toward distillates.
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In Singapore, inventories of light distillates, which include gasoline and naphtha, did rise in the week ended Oct.
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Differing fortunes for crude and distillates reflect differing forecast trajectories for oil production and consumption in 2019/2020.
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The gasoline oversupply has presented refiners with the unusual dilemma of whether to switch summer output towards distillates.
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Analysts had expected distillates to draw by just 1003 million barrels and gasoline to decline by 2100 million.
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Margins remain exceptionally high which provides a strong incentive to maximise crude throughput and the yield to distillates.
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The grade has a higher yield of gasoil and vacuum distillates compared with other products, according to the assay.
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The rules, known as IMO 2020, are expected to tighten supplies of distillates globally, including diesel and heating oil.
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The distillate crack spread, a measure of the profit from refining crude into distillates, touched a one-month low.
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The stockpiles report published earlier this month showed a strong build up in crude oil, gasoline stocks and distillates.
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Overall, 2016 demand for distillates was 3.9 million bpd, down 2.7 percent from the year prior, EIA data showed.
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The data also showed much larger-than-expected increases in stocks of gasoline and a surprise drop distillates inventories.
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Gasoline stocks also hit a record high, while stocks of distillates, including heating oil and diesel, were also up.
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In the U.S., warm weather has contributed to a build-up of distillates, which is diesel and heating oil.
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Inventories for middle distillates in Singapore fell by 161,000 barrels to 11.4 million barrels in the week to Feb.
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The fact is we're kind of shifting the dynamics of who is competing for the middle blend of distillates.
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There is the middle of the barrel, which provides the lower sulfur distillates — diesel, jet fuel and heating oil.
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Inventories of distillates, which includes diesel and heating oil, fell by 1.3 million barrels, versus a forecast 891,000 barrels.
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Stockpiles of gasoline also dropped by 3 million barrels, while distillates fuels including diesel declined by 3.1 million barrels.
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Morgan Stanley says most shippers will opt for the latter, effectively shifting demand from other fuel types to distillates.
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Soft crude prices coupled with firm gasoil margins are giving refineries a strong incentive to maximise production of distillates.
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The EIA also reported a bigger-than-expected drawdown in gasoline versus an unexpected build in distillates, which include diesel.
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Switching the balance of fuel production is a rational response to market prices which show much better margins for distillates.
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Once recognized, neutral distillates or grain alcohol is then added to the recipe to synthetically formulate a wine or whiskey.
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In contrast to gasoline futures, crack spreads for middle distillates such as heating oil and diesel, have continued to climb.
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Total revenues were up 17 percent at $121 billion while oil revenues were up 15 percent due mostly to distillates.
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The slowdown in global trade and manufacturing is weighing on oil consumption growth, especially for middle distillates such as diesel.
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Product inventories are already tight in some cases, notably for middle distillates such as gasoil, diesel fuel and heating oil.
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U.S. inventories of distillates, which include diesel and heating oil, rose by 21 million barrels in the week to Sept.
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Clearsource, which is already trading middle distillates, is not the only company to expand into the naphtha arena this year.
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Colonial Pipeline, the largest American fuel system, was restarting the distillates segment of its pipeline from Texas to New Jersey.
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Refiners typically adjust the yield of middle distillates, which include jet fuel, kerosene, gasoil and diesel, according to the margins.
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Last March, refinery crack spreads, a leading indicator of profits from gasoline and distillates, were as high as 33 percent.
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The same caution has spread to fund buying of refined fuels such as distillates as financial investors temper their previous optimism.
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BB also continues to expand in conventional markets and has recently expanded its gasoline and distillates teams in London and Houston.
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So the collapse in sentiment towards distillates is consistent with growing concerns about the outlook for the global economy in 2019.
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Meanwhile, refiners globally are also processing more medium and heavy crude to reap higher profits from fuel oil and middle distillates.
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"They will have to pay high," said one trader of distillates, a group of fuels that includes diesel and jet fuel.
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Stockpiles of distillates, which include diesel and heating oil, declined by 1.3 million barrels to 150.9 million, according to the EIA.
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Inventories of distillates hit their lowest levels since 2014 in the most recent week, according to U.S. Energy Information Administration data.
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Stocks of distillates, including diesel and heating oil, dropped by 4.1 million barrels, almost four times bigger than the expected drawdown.
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Analysts polled by Reuters had forecast a 1.2 million barrel build in distillates and a 20183 million barrel draw in gasoline.
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The main distillates line, which had been shut as a precaution before being restarted, was excavated for visual inspection on Wednesday.
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To keep meeting healthy demand for mid-distillates, refiners are processing high volumes of crude and creating a glut of gasoline.
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The third factor at work is rising exports of refined products, particularly gasoline and middle distillates such as diesel and kerosene.
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Stockpiles of middle distillates in Singapore were at a five-year high year, adding to worries of a worldwide petroleum glut.
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The crude draw supported oil prices, but gasoline stocks surprisingly rose and stocks of distillates were down by less than anticipated.
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Analysts polled by Reuters had forecast a 123 million barrel build in distillates and a 0.7 million barrel draw in gasoline.
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Heating oil futures , one of the main components of distillates, settled up nearly 1 percent on Tuesday at $1.5686 per gallon.
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U.S. refiners will have to process record volumes of crude this summer to meet growing demand for both light and middle distillates.
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Gasoline inventories increased last week in line with forecasts, while distillates posted an unexpected drawdown, the statistical arm of the EIA said.
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Gasoline inventories increased last week in line with forecasts, while distillates posted an unexpected drawdown, the statistical arm of the EIA said.
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Funds are the least-bullish towards middle distillates since July 2017, according to an analysis of position data from ICE Futures Europe.
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Stockpiles of middle distillates in Singapore were at a five-year high year, also adding to worries of a worldwide petroleum glut.
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From a fundamental perspective, stocks of gasoline and especially middle distillates look somewhat tight as winter approaches in North America and Europe.
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As with crude, however, investors have become moderately bullish on the outlook for middle distillates such as gasoil, diesel and jet fuel.
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"The market is going to forgive short-term oversupply based on a view of increased demand for distillates in 2020," he said.
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Growing bullishness towards mid-distillates masked a more wary approach to crude and other refined fuels in the week to Jan. 2.
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Gasoline stocks are expected to decline by 1 million barrels and diesel and other distillates are projected to drop by 300,000 barrels.
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CHINA THE X-FACTOR The peak winter demand season is coming, which usually boosts consumption of middle distillates such as heating oil.
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From 1915-1920 onwards, refineries were increasingly geared to produce gasoline as the main product, while middle distillates became a by-product.
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Middle distillates such as diesel are expected to support overall demand for the fourth quarter, the company said in an earnings statement.
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The summer is typically when refiners build stocks of distillates to meet growing fall and winter demand for heating oil and crop harvesting.
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In the United States, distillates stocks, which include diesel and heating oil, reached their highest seasonally since 2010, the Energy Information Administration said.
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"We have to diversify from conventional fuel, we have to go with the flow" Frederic Lassau, global head of middle distillates, told Reuters.
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Pessimism about the outlook for crude prices was reflected by a similar collapse in sentiment towards middle distillates such as gasoil (tmsnrt.rs/2PtIemz).
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Crude prices fell about 200 percent for a second straight day on Wednesday following a 4.6 million barrel build in U.S. distillates inventories.
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Notwithstanding strong demand for distillates, rising oil prices are already starting to restrict overall consumption growth, principally through their impact on gasoline sales.
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Midstream companies rushed to build condensate splitters, which break light oil into products such as naphtha and unfinished distillates, during the shale boom.
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Gasoline stocks, like distillates, have drawn down this year, but the reduction has been far smaller and stocks remain above the decade average.
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"With diesel yields already maxed out, refiners may need to lift runs in 2H19 to meet rising demand for marine distillates," it said.
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Tong, who has more than 20 years of experience in the oil industry, was previously head of Vitol's middle distillates team in Asia.
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Stagnant or falling freight over the last 15-20153 months has in turn cut consumption of middle distillates like diesel fuel (tmsnrt.rs/1paaT31).
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Encouraging to bulls, however, was the increase in distillate demand and drawdown of 1 million barrels in distillates, or diesel and heating oil.
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Total U.S. oil demand was up 3 percent in July compared with last year, driven by strong demand for distillates, EIA data shows.
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Oil companies expect a jump in demand for cleaner distillates, mainly diesel, at the expense of fuel oil that would become largely redundant.
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Inventories of distillates USOILD=ECI, which include diesel and heating oil, slumped by 3.2 million barrels, versus expectations for a 642,000-barrel drop.
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But the forthcoming regulations are expected to increase consumption of middle distillates and cause that segment of the oil market to tighten significantly.
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So far, the forthcoming switch has had little impact on either hedge fund positioning or prices in the middle distillates markets (tmsnrt.rs/2UY22020Bw22019).
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So far, the forthcoming switch has had little impact on either hedge fund positioning or prices in the middle distillates markets (tmsnrt.rs/29UY22020Bw22019).
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Benchmark heating oil futures , a proxy for other distillates, traded at $2.1094 a gallon on Thursday, the highest since the end of January.
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"A triumvirate of draws for crude, gasoline and distillates is a supportive influence for prices," said Matt Smith, director of commodity research at ClipperData.
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But gasoline stockpiles grew by 210 million barrels and distillates, which include diesel and heating oil, rose 2000 million barrels, versus forecasts of drawdowns.
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LONDON (Reuters) - A sharp increase in demand for distillates following new shipping fuel rules will fade quickly, the International Energy Agency said on Monday.
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Crude was also helped by a gasoline rally after Colonial Pipeline Co shut its main gasoline and distillates pipelines following an explosion in Alabama.
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The gasoline demand numbers were strong enough to overcome weaker demand for distillates, which fell to 1.3 percent, or 48,000 bpd, versus last year.
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However the EIA data showed distillates, which include diesel and heating oil, fell 3.7 million barrels and gasoline declined 1.9 million barrels, Reuters wrote.
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Distillates also hit a two-week low as investors worried whether the coming autumn will be cold enough to boost heating oil demand adequately.
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The EIA reported a drop of 3.7 million barrels for distillates, which include diesel and heating oil, and 22014 million barrels decline for gasoline.
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Refiners have only limited flexibility to shift from producing gasoline to distillates in the short term ("Increasing distillate production at U.S. refineries", EIA, 2010).
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But highly refined, cosmetic-grade mineral oil and other cosmetic-grade petroleum distillates, like petrolatum (see below), are "generally of low concern," Masten says.
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"Asian complex refiners are best positioned given their high sour crude ratio and mid-distillates yield," Citi analyst Oscar Yee said in a note.
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Increased bullishness towards middle distillates therefore accounted for all the increase in net long positions across the six major contracts in the petroleum complex.
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The weak spot in the market is middle distillates, where lingering fears about global growth and trade flows continue to discourage aggressive position-building.
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In addition, refining runs fell, pulling back from a 22.4-year-high in capacity utilization, and stocks of gasoline and distillates like diesel rose.
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Exports of distillate inventories have been strong of late, draining inventories on the East Coast, a traditional parking spot for distillates like jet fuel.
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Samples of lung fluid from the 29 patients were also tested for plant oils, petroleum distillates like mineral oil and other potentially harmful substances.
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The U.S. Energy Information Administration said inventories of distillates, fell more than 4 million barrels, trumping expectations for a rise of about 2 million.
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In total, 225 cubic meters of oil blended with distillates leaked, with 60 percent contained on land, Saskatchewan's ministry of economy said on Thursday.
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The EIA reported a drop of 2000 million barrels for distillates, which include diesel and heating oil, and 227 million barrels decline for gasoline.
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Rising inventories of both gasoline and middle distillates, after an unusually long and heavy summer refining season, have inspired a similar restraint toward fuels.
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For refineries that have invested in delayed coking units, however, heavy crudes can yield large volumes of middle distillates (gasoil, diesel and jet fuel).
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Asian refiners' margins for middle distillates also strengthened last month, the sources said, underpinning prices for lighter grades that yield more of these products.
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The gasoline demand numbers were strong enough to overcome weaker demand for distillates, which fell to 2.8 percent, or 113,000 bpd, versus last year.
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Inventories of petroleum products also increased with gasoline stocks surging by more than 5 million barrels and distillates gaining just over 4 million barrels.
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Most refiners have been planning to increase their yield of middle distillates for nearly a decade in response to projections of increased diesel demand.
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As a result, some analysts are forecasting a severe shortage of middle distillates, causing prices to spike, while others see a more limited impact.
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Refiners have already begun switching yields to distillates to chase margins, despite being in the heart of the busy summer driving season, Rogers said.
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Vitol expects around 750,000 barrels per day (bpd) of middle distillates to go into the 3 million bpd bunker pool to make the new product.
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Despite the soft demand for gasoline, demand remains strong and profit margins are holding up for distillates like diesel, jet fuel and home heating oil.
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But stocks of gasoline and distillates surged as refiners ramped up production to reduce crude inventories, a typical year-end practice to avoid higher taxes.
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According to Platts, analysts expected weekly crude supplies to grow by 22.39 million barrels; gasoline by 53 million barrels and distillates by 25 million barrels.
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U.S. crude stockpiles are expected to have increased for a sixth straight week, while distillates and gasoline stocks likely fell in the week to Oct.
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The oil industry was the fastest-growing customer for middle distillates like diesel between 53 and 2014, according to the U.S. Energy Information Administration (EIA).
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But the EIA also reported that inventories of distillates, which include diesel and heating oil, rose by 23 million barrels in the week to Sept.
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Refiners would normally try to trade their way around the problem, exporting surplus distillates and/or importing more gasoline to meet demand without increasing runs.
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Oil consumption is normally led by gasoline during the first phase of each cyclical upswing until distillates become the primary driver in the second phase.
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Simpler and less sophisticated than refineries, they convert condensate into unfinished distillates and naphtha, a building block for gasoline that also can dilute heavy crude.
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Trafigura's trading desk merger mirrors a similar move by oil-giant BP, which combined its fuel oil and middle distillates desks about four months ago.
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Exports of distillates have consistently remained above 1 million bpd, EIA data shows, fueled by strong demand and unplanned outages in Europe and Latin America.
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Demand for distillates like diesel and home heating fuel doesn't typically pick up until the back half of the quarter when temperatures start to drop.
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The move by Colonial Pipeline to resume transporting distillates such as diesel fuel comes as the Gulf region's energy industry starts to come back online.
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Over the past year, the region imported an average of around 180,000 barrels per day of distillates, according to the U.S. government's Energy Information Administration.
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In contrast, fund managers are becoming slightly less bearish towards middle distillates such as European gasoil, which had previously been hardest hit by slowdown fears.
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Expectations for a cold winter will only increase demand for distillates, since many residences in New England still rely on home heating fuel, according to Lipow.
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The shift is most evident in middle distillates, where funds are now running the biggest net short position in U.S. heating oil for almost two years.
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The nation's inventories of gasoline rose by 8.1 million barrels, while its stockpiles of distillates, which include diesel and heating fuel, jumped by 10.6 million barrels.
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It expects sweet crude with higher levels of distillates such as Nigeria's Bonny Light or U.S. shale to be more in vogue than heavier, sour crude.
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CCI used to have traders across the barrel, including fuel oil and middle distillates, but industry sources said these traders left between 2016 and early 2018.
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Inventories of distillates, which include diesel and heating oil, rose nearly 3.45 times as much as forecast, the data from the U.S. Energy Information Administration showed.
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The problem for U.S. refiners is the market will be carrying an enormous overhang of distillates from winter 2015/16 which will continue to depress margins.
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She noted inventories of crude, gasoline and distillates fell by 0.4 million barrels a day, versus estimates for a build of 203 million barrels a day.
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Refiners are likely seeking to increase stocks of distillates to ensure adequate stocks at bunkering terminals and smooth the introduction of the new marine fuel rules.
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Gasoline consumption, which had been growing much faster than distillates, slowed in the last three months of 2015 and then again in January 2016 (tmsnrt.rs/1WhzjSI).
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Hedge funds have accumulated a record bullish position in middle distillates such as diesel, heating oil and gasoil, anticipating stocks will be relatively tight this winter.
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On Tuesday, a Colonial spokesman said that it had allocated space for gasoline on its distillates line until it could resume normal service on Line 1.
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But Morgan Stanley warns that stockpiles of middle distillates, which include diesel and jet fuel, are nearing five-year lows as demand for the fuel grows.
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There's a growing market for these illegal vapes and cartridges, which use cannabis distillates in a liquid form, rather than marijuana flower, to get users high.
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Inventories of distillates, which include diesel and heating oil, rose nearly 10 times as much as forecast, the data from the U.S. Energy Information Administration showed.
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U.S. refiners are still returning to full operations after Hurricane Harvey last month, but gasoline stocks surprisingly rose and stocks of distillates fell less than anticipated.
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The brewery and restaurant also offers its own distillates, produced on its own pot still and sold under the name of Hinricus Noyte, its first brewmaster.
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Oil prices on Wednesday fell after a U.S. report showed big increases in gasoline and distillates inventories and as crude production rose to a new record.
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Funds have become increasingly bearish towards all elements of the petroleum complex in recent weeks, but especially crude and mid-distillates such as diesel and gasoil.
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Robinson predicted that global vessels could soon switch away from the 3.5 million barrels per day of high sulfur fuel oil to distillates — which includes diesel.
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Consumption of middle distillates such as gasoil, diesel and jet fuel, used mostly in freight transport, manufacturing and mining, is closely correlated with the business cycle.
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The federal regulators found that the authority was burning something known as "sludge," the oil that is left after more desirable distillates are removed from crude oil.
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Portfolio managers' long positions now outnumber short ones by 35:1 in gasoline and 11:1 in crude, but just 3:1 in middle distillates (tmsnrt.rs/2XX4fyy).
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The API also cited an unexpected rise of 1.5 million barrels in gasoline and 2.6 million in distillates, that include diesel, for the week to July 8.
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Middle distillates are heavily geared towards the economic cycle because most distillate fuel oil is used in freight transportation (shipping, railroads, aviation, trucks), manufacturing, mining and farming.
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Continued global economic expansion, albeit at a slower pace than in 2018, should underpin further increases in consumption of mid-distillates such as diesel and jet fuel.
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Fund long positions outnumbered short ones by a margin of 230:229 in gasoline, 224:1 in crude and 3:1 in middle distillates on April 23.
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Following last week's sales, the long-short ratios have been trimmed slightly to 28:1 in gasoline, 2019:1 in crude and 2:1 in middle distillates.
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Refineries in America and elsewhere are thirsty for heavy crude, because Venezuela's production of the stuff has dropped and demand for distillates made with it is strong.
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To meet gasoline demand from motorists, refiners have to process increased volumes of crude, leaving them with unwanted stocks of hard-to-sell distillates and other products.
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Jet fuel and kerosene are closely related and belong to a grade of oil products called middle distillates, with jet fuel margins determining the profitability of both.
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Prices of distillates, which include heating oil and diesel, have seen an unusual surge in recent weeks due to robust overseas demand combined with lower domestic production.
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In September, Colonial temporarily hauled gasoline on its distillates line, which normally moves diesel and jet fuels, and restarted sections of the line before fully restoring service.
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Reduced diesel consumption in favor of gasoline in Europe will play an important role in helping make more middle distillates available for the shipping industry in 2020.
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Heading into the winter, OPEC sees strong demand for distillates — refined petroleum products like heating oil — due to forecasts for a colder winter compared with last year.
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Stockpiles of distillates are below the five-year average, OPEC reports, and U.S. refinery disruptions caused by Hurricane Harvey only quickened the already-steady decline in inventories.
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"New fuel blends, with plenty of middle distillates brought into the bunker pool, are the likely winners in the post-2020 shipping fuel shift," the consultancy said.
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As Inverse recently reported, there's a growing market for these cartridges, which use cannabis distillates in a liquid form rather than marijuana flower to get users high.
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Gasoline inventories are just below the five-year high, while distillates sit below five-year highs, according to the latest data from the U.S. Energy Information Administration.
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U.S. crude stocks fell last week as exports hit a new one-week record, while inventories of both gasoline and distillates fell, the Energy Information Administration said.
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So oil consumption, especially middle distillates such as diesel, which are closely linked to freight transportation and industrial activity, is likely to grow more slowly in 2019.
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The first phase of 400,000 cubic meters of storage across 14 tanks for middle distillates and fuel oil was completed in October and began operations in January.
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In late October, Organa announced the release of Bakked distillates, a product line with cannabis oils that have cannabinoid contents with up to 299 percent activated THC.
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Mid-distillates are especially prized at the moment with the forthcoming introduction of new bunker fuel regulations by the International Maritime Organization from the start of 2020.
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As a result, funds long-short ratio in middle distillates has fallen to just 0.7:1991, compared with 2.4:1 in crude and 5.3:1 in gasoline.
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As well, U.S. crude stockpiles are expected to have increased for a sixth straight week, while distillates and gasoline stocks likely fell in the week to Oct.
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However, strong refinery demand to meet the need for distillates should continue to tighten the underlying market for crude, and hedge funds are becoming progressively more bullish.
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Middle distillates margins have declined because of lower industrial and airline demand after China shut factories and countries imposed travel restrictions to prevent the coronavirus from spreading.
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LONDON, Jan 9 (Reuters) - * The head of the middle distillates desk at the world's top oil trader Vitol, Kenya Matsumoto, is retiring, trading sources said * Matsumoto, who joined Vitol in 2006, will be replaced by Matt Stacey, who moved to Vitol in 2014 after heading Royal Dutch Shell's middle distillates desk, the sources said * Vitol declined to comment Reporting by Ron Bousso and Julia Payne; Editing by Jan
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Distillates are the most heavily exposed to the business cycle since most gasoil and diesel is used in freight transportation, manufacturing, mining, oil and gas extraction and farming.
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The terminal, which cost $92 million, is designed to hold mostly middle distillates, with 22017,2154 cubic metres of space for gasoil and 2000,22018 cubic metres for jet fuel.
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"Crude stocks were bolstered by rebounding imports, while both gasoline and distillates draws were exacerbated by higher implied demand," said Matt Smith, director of commodity research at ClipperData.
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LONDON (Reuters) - U.S. refiners are likely to see stronger demand for middle distillates such as heating oil and diesel in 2017 after two years of declining domestic consumption.
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BPGIC completed the first phase of 400,000 cubic metres of storage across 14 tanks for middle distillates and fuel oil in October and began operations in January 2018.
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Margins for distillate products, however, held their ground, due to French imports and hot weather across Asia that boosted demand for distillates to be used in power generators.
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European stocks of middle distillates, which include diesel and heating oil, declined by less than 1 percent to around 440 million barrels in September, according to Euroilstock data.
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Singapore's onshore light distillates, which comprise mostly gasoline, had the most significant drawdown, resulting in inventories hitting slose to a 9-1/2 month low, the data showed.
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Chinese diesel exports are largely being sent to tanks in Singapore and Taiwan as demand has failed to keep up in the region, a middle distillates trader said.
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But if growth shifts back towards industry – and to developing economies, as many forecast it will - distillates used in mines, oil rigs and agriculture could get a boost.
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Murban could continue to face similar pressure next month as refinery maintenance in Asia cuts demand and as refining margins for light distillates remain weak, the sources said.
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By the end of January, money managers had established a bullish position in futures and options contracts equivalent to almost 1.5 billion barrels of crude, gasoline and distillates.
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A move to make shippers to use fuel with less sulfur from 2020 will offer further opportunities for refiners to boost margins by supplying more low-sulfur distillates.
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High Gulf Coast export demand has boosted buying in the region and strengthened prices for distillates like heating oil and ultra-low sulfur diesel, market sources told Reuters.
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Singapore's onshore light distillates, which comprise mostly gasoline, had the most significant drawdown, resulting in inventories hitting close to a 9-1/2 month low, the data showed.
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Scott Shelton, energy broker at ICAP in Durham, North Carolina, feared of big builds in U.S. distillates, which include heating oil and diesel, as refineries emerge from maintenance.
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BPGIC completed the first phase of 400,000 cubic meters of storage across 14 tanks for middle distillates and fuel oil in October and began operations in January 2018.
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The latest data from Singapore's International Enterprise (IE) showed that onshore light distillates stocks held in the week to Tuesday were at a record of 15.635 million barrels.
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It completed the first phase of 400,000 cubic meters of storage across 14 tanks for middle distillates and fuel oil in October and began operations in January 2018.
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"Countering this bearish build has been draws to both gasoline and distillates amid strong implied demand," said Matt Smith, director of commodity research at ClipperData in Louisville, Kentucky.
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A move to make shippers to use fuel with less sulphur from 2020 will offer further opportunities for refiners to boost margins by supplying more low-sulphur distillates.
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"We will continue to take U.S. cargoes because we find value in them," Chief Executive Officer Srinivasalu Thangapandian told Reuters at a Platts middle distillates conference in Antwerp.
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But there were continued heavy sales of futures and options contracts linked to middle distillates such as gasoil and diesel, in a worrying sign for the global economy.
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Consumption of gasoline, distillates, fuel oil and other petroleum products across the region grew at a compound average rate of 3.9 percent per year between 2004 and 2014.
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In the United States, crude inventories probably grew for a fourth week while distillates and gasoline stocks likely fell last week, a preliminary Reuters poll showed on Monday.
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Suppliers for Bangladesh's middle distillates contracts include Kuwait Petroleum Corp, Malaysia's Petronas, Emirates National Oil Company, Philippines National Oil Company, Vietnam's Petrolimex, Indonesia's Bumi Siak Pusako and PetroChina.
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However, stockpiles of distillates, which include diesel and heating oil, have sunk below four-year lows this summer amid surprising domestic demand and continued pull from Latin America.
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The global refining industry needs to process an extra 2.5 million bpd of crude to make distillates for cleaner fuel, says Robert Herman, refining executive at Phillips 66.
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Consumption of middle distillates will be the most affected by any cyclical slowdown because of their intensive use in manufacturing, freight transportation, mining, and oil and gas production.
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"There's growth in products trading in middle distillates because of exports from China," Gursel added, as well as noting the company would look to boosting trade with Southeast Asia.
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"Mexico's appetite for U.S. gasoline and distillates has played a significant part in sustaining Gulf Coast refining margins," said Sandy Fielden, director of oil and products research at Morningstar.
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"Distillates are the standout bullish element of the report and gasoline is the disappointment," said Matt Smith, director of commodity research at New York-headquartered energy data provider ClipperData.
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Even if they can switch to using lighter crude grades, they end up producing more gasoline than desired and not enough middle distillates, such as diesel and jet kerosene.
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The biggest positioning imbalances are concentrated in crude and U.S. gasoline; there is no sign of similar imbalances in middle distillates such as U.S. heating oil and European gasoil.
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Mexico has grown increasingly dependent on fuel imports in recent years, with imported gasoline, distillates and liquefied petroleum gas growing last year to about two-thirds of total demand.
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Despite the reduction in processing, there has been no shortage of either gasoline or distillate fuel oil, with gasoline stocks level with last year and distillates comfortably above it.
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Forward refining margins for gasoline and distillates delivered at the end of year do not provide refiners with any significant incentive to boost processing compared with normal seasonal patterns.
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Data from the Energy Information Administration showed that stateside inventories of distillates, which include diesel and heating oil, rose by 4.6 million barrels in the week to September 9.
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Demand for distillates should also improve if global freight picks up from its current soft patch and next winter is colder than the last one across the northern hemisphere.
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This is a marked change for China, which used to be a net importer of middle distillates and the only refined product it exported in significant quantities was gasoline.
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At the same time, U.S. refineries have been running at record rates to meet strong demand for gasoline from motorists, and producing large quantities of distillates in the process.
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The U.S. last week exported a record 8 million barrels of gasoline and nearly 10 million barrels of distillates, or diesel, according to weekly government data released on Thursday.
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On the supply side, U.S. crude stockpiles were expected to have increased for the sixth straight week, while distillates and gasoline stocks likely fell in the week to Oct.
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The IMO's 2020 regulation calls for sulfur content in marine fuels to decline to 0.5 percent from 3.5 percent, spurring new demand for the distillates the refinery would produce.
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U.S. gasoline demand over past four weeks rose 3.9 percent year-on-year, but stocks of the motor fuel rose 627,000 barrels last week, while distillates grew 151,000 barrels.
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But with gasoline stocks under control and refineries still processing at high rates to meet demand from motorists, the focus has shifted to the potential over-production of distillates.
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Although the structure for middle distillates is slightly backwardated, he added the backwardation is narrower further ahead, a sign which indicates that demand for storage will become stronger later.
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Oversupply has pushed refining margins for middle distillates to the lowest since 2010, when the global economy was just emerging from the aftermath of the financial crisis(tmsnrt.rs/1PAN1Lp).
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Distillate prices have also moved to a significant premium over crude oil to encourage refiners to maximize crude processing and the yield to middle distillates rather than other products.
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Platts, a unit of S&P Global Inc, will begin publishing independent prices for Middle East gasoline, middle distillates including diesel and jet fuel, and fuel oil from Oct.
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"Countering this bearish (crude) build has been draws to both gasoline and distillates amid strong implied demand," said Matt Smith, director of commodity research at ClipperData in Louisville, Kentucky.
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Portfolio managers were even more bearish towards middle distillates such as diesel, jet fuel and heating oil, cutting their net long position in European gasoil by 9 million barrels.
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The overhang in developed economies of middle distillates, which include diesel and heating oil, is at around 72 million barrels or around four days of consumption, according to Fyfe.
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Mid distillates account for around 35 million barrels per day of global oil consumption, most of which is used to transport freight ("Statistical Review of World Energy", BP, 2017).
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U.S. distillates were up 2.8 percent and gasoline futures rose 2.5 percent, briefly boosting the products crack spread, a measure of refinery margins, to its highest since November 2016.
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If the global economy is growing slowly, or even in recession, there will be more slack in the distillates market, making fuel switching easier, and muting the price impact.
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"Despite strong product demand on a year-on-year basis, we still saw builds to gasoline and the first build to distillates in eight weeks," said Vincent of ClipperData.
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"In aging, because all of the distillates are plant-based materials, the composition changes as these plant-based ingredients break down, age and recombine at different rates," Harden says.
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Recent reports have suggested traders are chartering vessels to act as floating storage near gasoil delivery hubs or key bunkering ports, and filling them with gasoil and other middle distillates.
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Much of the shipping industry has been similarly reticent; Maersk Oil, which operates 161 tankers, told a refining summit this year that it planned to rely on low-sulfur distillates.
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U.S. gasoline inventories rose 12.2 million barrels, and distillates rose 1.5 million, with both fuels in the Gulf Coast region hitting their highest on record for this time of year.
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Selling has been concentrated in crude and the middle distillates used heavily in manufacturing and transportation, including aviation and shipping, the sectors most exposed to Chinas economy and the coronavirus.
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Many Asian refiners prefer heavier crudes as they maximize output of middle distillates, while much of the addition to world crude supply has been lighter grades, such as U.S. shale.
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Many Asian refiners prefer heavier crudes as they maximise output of middle distillates, while much of the addition to world crude supply has been lighter grades, such as U.S. shale.
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Demand for medium and heavy crudes, with a high yield of middle distillates, has been strong since the start of the year, helping narrow the light-heavy differential (tmsnrt.rs/2eTo4WB).
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Prices of ultra-low sulfur diesel, also known as heating oil, rose 4 percent and hit 4½-month highs after the unexpected drop in stockpiles of distillates, which include diesel.
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And the risk is that refiners are merely displacing the oversupply problem from gasoline to distillates if freight demand does not pick up or the forthcoming winter is relatively mild.
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U.S. gasoline inventories rose 4.4 million barrels, and distillates rose 1.5 million, with both fuels in the Gulf Coast region hitting their highest on record for this time of year.
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Refiners have already begun to cut crude processing and switch output to distillates, but it will likely take 1-2 months to bring gasoline stockpiles back to more normal levels.
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The forecast increase in consumption of middle distillates has led to widespread predictions of shortages and price increases ( "Economic Report of the President", U.S. Council of Economic Advisers, March 23).
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Heavier, sour grades that yield higher-value middle distillates such as diesel, like Russian Urals, have benefited from OPEC's output cuts and U.S. sanctions on competing grades such as Iran's.
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Exxon's forecast comes as its refining business is struggling to find enough heavy crude to make fuel oil and other distillates, in the face of U.S. sanctions on Venezuelan crude.
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Ship owners have several choices in order to comply with the new rules, but the easiest is to burn middle distillates, which are lower in sulfur, but far more expensive.
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Futures of heating oil, also known as ultralow sulfur diesel, jumped 3 percent as stockpiles of distillates, which include ULSD, fell much more sharply than expected, the EIA data showed.
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The forecast increase in consumption of middle distillates has led to widespread predictions of shortages and price increases ("Economic Report of the President", U.S. Council of Economic Advisers, March 23).
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Mid-distillates such as road diesel and marine gasoil are the fuel of choice for manufacturers and freight companies, so their refining margin is closely correlated with the economic cycle.
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The gasoline demand numbers were strong enough to overcome flat demand for distillates, which was relatively unchanged in June at 3.85 million bpd compared with last year, EIA data showed.
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A key choke point, however, is forming in middle distillates – the diesel used to power trucks and generators, and the heating oil that warms homes around the world in winter.
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LONDON (Reuters) - Middle distillates remain the one ray of hope for U.S. oil refiners still struggling to clear a glut of gasoline caused by over-production earlier in the year.
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While refining margins for making diesel and other distillates have continued to deteriorate this has been more than offset by a sharp improvement in gasoline prices and margins (tmsnrt.rs/1WdLYbu).
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Suppliers for Bangladesh's middle distillates contracts include Kuwait Petroleum Corp, Malaysia's Petronas, Emirates National Oil Company, Philippines National Oil Company, Vietnam's Petrolimex, Indonesia's Bumi Siak Pusako, PetroChina and Thailand's PTT.
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U.S. sanctions on Iran and Venezuela have choked off supply of the heavier, more sour crude that tends to yield larger volumes of higher-value distillates, as opposed to gasoline.
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Other than KPC, suppliers for Bangladesh's middle distillates contracts include Malaysia's Petronas, Emirates National Oil Co (ENOC), Indonesia's Bumi Siak Pusako, Philippines National Oil Co, Vietnam's Petrolimex, PetroChina and Unipec.
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Oil prices firmed on a bigger-than-expected decline in U.S. crude inventories and surprise drawdowns in gasoline and distillates, which indicated strong demand in the world's top oil consumer.
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Middle distillates, which are mostly consumed in freight transportation, manufacturing, mining and farming, are normally the tightest part of the oil market at this late stage of the economic cycle.
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Several other ingredients were thought to be playing a potential role in the outbreak as well, including plant oils, petroleum distillates like kerosene, and vape mixing agents called diluent terpenes.
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LONDON (Reuters) - World trade is growing again which will give a big boost to middle distillates such as diesel used in the high-power engines that move almost all freight.
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Over longer time horizons, refiners have multiple routes to increase the output of diesel by investing in new processing units ("Refinery configurations for maximum conversion to middle distillates", Chevron, 2011).
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Hedge funds are betting a global scarcity of fuels will manifest itself in gasoline this summer, pushing prices higher, before tightness switches to distillates later in the year and into 2020.
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The heaviest selling was concentrated in WTI, reflecting concerns about local overproduction of crude in the United States, and middle distillates, reflecting concerns about a global slowdown hitting freight and manufacturing.
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Colonial Pipeline ships more than 3 million barrels per day of fuel from the Gulf Coast to the populous East Coast, and its line 3 can carry both gasoline and distillates.
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Lower volumes and prices for basic petrochemicals made from oil distillates contributed to the decline, as did marked down prices of intermediate chemicals used in heat insulation slabs and upholstery foams.
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Robeco is selecting so-called complex refineries, plants with lots of units that can turn low-value fuel oil into higher-value products such as distillates, octane and low-sulphur fuel.
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Investors' fears about the impact of trade tensions and heightened uncertainty on business investment and growth next year is darkening the outlook for distillates just as it is hitting equity markets.
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Overall, refiners are still enjoying healthy margins as the strong profits from gasoline compensate for much weaker profits on distillates; the market is signalling that refiners should continue to maximise production.
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But even if this is the case, it's more likely that ongoing liberalization of fuel exports will result in higher quotas and therefore encourage China's refiners to export more middle distillates.
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In the near term, downward pressure on product and crude prices has intensified because of the record or near-record bullish positions held by hedge funds in distillates, gasoline and crude.
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Money managers, a category which includes many hedge funds and other investors, have accumulated record positions in crude, gasoline and distillates since the middle of last year, according to regulatory data.
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Data from the U.S. Energy Information Administration showed inventories of distillates such as heating oil fell by more than 4 million barrels, trumping expectations for a rise of nearly 2 million.
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Overall, refiners are still enjoying healthy margins as the strong profits from gasoline compensate for much weaker profits on distillates; the market is signaling that refiners should continue to maximize production.
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But even if this is the case, it's more likely that ongoing liberalisation of fuel exports will result in higher quotas and therefore encourage China's refiners to export more middle distillates.
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The U.S. Energy Information Administration reported a drop of 3.7 million barrels for distillates late on Thursday, which include diesel and heating oil, and a 1.9-million barrel decline for gasoline.
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Edibles tend to use distillates, a form of THC that is supposed to be void of taste, or cannabutter, which is butter infused with cannabis that provides a strong, euphoric high.
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"Distillates will strengthen in the process at least early on," said Erginbilgic, adding that new refineries being built in Asia and the Middle East would help meet new marine fuel demand.
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U.S. RBOB gasoline futures fell 0.3 percent to $1.711 a gallon, while heating oil futures, a proxy for distillates like diesel and fuel oil, dropped 0.8 percent to $1.81 a gallon.
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Distillates are still used as heating oil for some homes, schools and commercial buildings, especially in the Northeast, though this source of seasonal demand has become less important in recent years.
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Sinanju's bunker tanker, the Marine Pamela, is Singapore's first distillates bunker tanker installed with two flow meter systems and was involved in the test procedures for distillate MFMs, the company said.
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Prior to this, OTC's London operations included crude oil products and derivatives, refined products and derivatives including middle distillates, gasoline cracks, biofuels and physical and financial LPG and natural gas liquids.
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Distillates tend to be in short supply towards the end of the economic and oil price cycles as industrial activity heads towards a peak, helping put upward pressure on crude prices.
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After an initial bearish reading of a U.S. Energy Information Administration report, traders soon focused on sharp inventory drawdowns in distillates, including diesel and heating oil, and a decline for gasoline.
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In 2014, Tullett Prebon bought oil broker PVM Oil Associates Ltd for $160 million to expand its suite of energy products and deepen its global crude, refined and middle distillates coverage.
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The gasoline demand overcame a drop in demand for distillates, which fell in June by 3.32 percent, or 131,000 bpd, to 3.905 million bpd compared with last year, EIA data showed.
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CYCLICAL SLOWDOWN Mid-distillates such as road diesel and marine gasoil are the fuel of choice for manufacturers and freight companies, so their refining margin is closely correlated with the economic cycle.
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"The build in crude stocks was more than overshadowed by draws in excess of 2514 million barrels for both gasoline and distillates," said Troy Vincent, oil analyst at ClipperData in Louisville, Kentucky.
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Refiners have reconfigured their equipment to maximise output of middle distillates and minimise production of residual fuel oil ahead of the introduction of new marine fuel regulations at the start of 2020.
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Regulations adopted by the International Maritime Organization will require shipping firms to switch from using heavy fuel oil to middle distillates unless they install expensive scrubbers to clean up their sulfur emissions.
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North Dakota's Bakken shale drillers produce crude that's better suited to making middle distillates, so Morgan Stanley highlights Continental Resources, Oasis Petroleum and Whiting Petroleum as potential outperformers among independent shale drillers.
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The result is that U.S. stocks of distillates, such as home heating fuel and diesel fuel, have emerged from the end of winter looking somewhat tight despite heavy levels of refinery processing.
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Middle distillates are used mostly in freight transportation as well as manufacturing, mining and farming, and are particularly valuable late in the business cycle when economic activity is near to the peak.
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Stocks of mid-distillates have been dwindling since February as refinery problems and a strong synchronised upturn in industrial activity and freight demand around the world has caused consumption to exceed supply.
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Crude inventories in the United States are expected to have grown for a fourth week while distillates and gasoline stocks are also likely to have fallen, a Reuters poll showed on Monday.
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A sharp fall in gasoline and fuel oil margins in recent days precipitated the fall, with a relative strength in middle distillates failing to keep overall margins in positive territory, traders said.
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The gasoline demand numbers were not strong enough to overcome weak demand for distillates, which fell 7.7 percent year-over-year in July, or 299,000 bpd, to 3.578 million bpd, EIA data showed.
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As refinery rates hit their highest since September, stocks of distillates - which include heating oil, diesel fuel, jet fuel and other products - rose to 170 million barrels, levels not seen since October 2010.
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Distillates stocks, which include diesel and heating oil, in the East Coast dropped last week by around 8 percent to 46 million barrels, lowest seasonally since 2015, according to the Energy Information Administration.
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He said Asian refiners such as Thai Oil and S-Oil , were well placed as they produced a bigger than average proportion of middle distillates and had less exposure to high-sulphur fuels.
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ET. "Crude, gasoline and distillates inventories are all at or above the top of their five-year ranges; supply remains plentiful," said Matt Smith, director of commodity research at ClipperData in Louisville, Kentucky.
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Weighing on oil markets Thursday was a bearish report from the U.S. Energy Information Administration Wednesday which showed gasoline stocks surged by 8.4 million barrels while distillates stock jumped by 6.1 million barrels.
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Inventories of middle distillates in Singapore, Asia's main trading hub, rose to a five-month high of 13.64 million barrels in the week ended March 23, according to data from International Enterprise Singapore.
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But the slowdown in global trade growth and uncertain economic outlook are weighing on distillates, despite the planned introduction of new shipping rules that should boost demand from the start of next year.
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If global trade growth slows, consumption of mid-distillates will also decelerate — though the outlook for these fuels is complicated by the introduction of new marine fuel regulations at the start of 2020.
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Oil traders say that when it is running it always operates at full capacity to meet demand for bringing fuel into Germany, Europe's top consumer of distillates such as diesel and heating oil.
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U.S. distillates HOc1 and gasoline RBc1 futures both gained more than 2 percent, briefly boosting the products crack spread CL321-1=R, a measure of refinery margins, to its highest since November 2016.
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"Given the complexity of our refineries we are well positioned," said Erginbilgic, adding that 47 percent of output from BP's plants was distillates while less than 3 percent was high sulfur fuel oil.
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Shipments of ultra-low sulfur diesel (ULSD) have not yet increased but this may occur if line 1 cannot be reinstated, since Colonial is using its distillates line to haul gasoline, Panjiva said.
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Oil consumption and especially the use of middle distillates such as diesel is geared more towards manufacturing, construction and mining than the service sector, so is being hit hard by the industrial slowdown.
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Early U.S. oil refineries processed crude in batches, with each batch of oil loaded separately into a still, where it was heated until the distillates were boiled off, condensed and collected for sale.
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It came after a summer when refiners surprisingly reduced their volumes of distillates - heating oil, diesel, jet fuel and kerosene - just before demand for those products ramps up in the fall and winter.
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On the same day the Bakked distillates line was unveiled, I went to visit Organa labs to see how they turned Colorado's favorite flower into the most potent cannabis oil on the market.
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The Great Falls refinery processes heavy Canadian crude oil to make gasoline and distillates for markets in the U.S. states of Washington, Montana and Idaho as well as the Canadian province of Alberta.
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Oil prices rebounded after an initial bearish reading from a U.S. Energy Information Administration report soon focused on sharp inventory drawdowns in distillates, including diesel and heating oil, and a decline for gasoline.
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Trade is in turn a key driver of demand for middle distillates (including jet fuel, road diesel and marine gasoil) as well as the heavy fuel oil used in ocean shipping (tmsnrt.rs/2hnFlYM).
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But they are less bullish about distillates than about crude (where the long-short ratio in futures and options is 3.7:203) or U.S. gasoline (where the long-short ratio is 9.0:1).
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Valero has a diverse set of refineries that allows it to take advantage of volatile crude price differentials and process lower-quality feedstock into high-value refined products such as gasoline and distillates.
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U.S. refiners produced a near-record 212 barrels of middle distillates (mostly diesel and jet fuel) from every 215 barrels of crude in August, the most recent month for which data is available.
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Betting on other spreads has worked better with refining margins increasing sharply this year, as heavy demand for distillates has boosted those margins by more than 50 percent in the last two months.
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But the overall bullish trend masks sharply differing fortunes for crude and U.S. gasoline on the one hand and middle distillates such as U.S. diesel and European gasoil on the other (tmsnrt.rs/20203D22020jvl22).
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"We expect residue fuel demand to tank and middle distillates to surge and that will widen the light-heavy crude price differential," said Mitsuyasu Kawaguchi, general manager of Cosmo Oil's crude and tanker department.
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The market dynamics are consistent with reports that physical traders have started putting excess gasoil and other middle distillates, such as heating oil and road diesel, into storage in anticipation shortages later in 24.
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And to add to the confusion, some of those bidding for the fuel swap deals said they understood the limits to be 50 ppm for gasoline and a much-higher 500 ppm for distillates.
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But distillates are set to be the big beneficiary of the current global upturn, with diesel and jet taking over from gasoline as the fastest-growing source of fuel consumption in 2017 and 2018.
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API's inventory data, released after Tuesday's market close, showed a decrease of 1.2 million barrels of gasoline and 2.6 million barrels of distillates, but a rise of 1.3 million barrels of oil last week.
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Energy complex will be focused on the 10:30 release of the DOE data for Crude, Gasoline and Distillates - and the day's "Main Event" hits at 2pm when the Fed Releases Minutes from Dec.
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A mixture of maintenance in Asia and only a limited amount of new refineries coming online could give vulnerable refineries another stay of execution, speakers at the Platts Middle Distillates conference in Antwerp said.
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Oil prices were little changed but underpinned by a bigger-than-expected decline in U.S. crude inventories and surprise drawdowns in gasoline and distillates, which indicated strong demand in the world's top oil consumer.
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Seedlip is the world's first distilled, non-alcoholic spirit consisting of the distillates of six unique botanicals: American oak, Jamaican allspice, Guatemalan cardamom, Bahamian cascarilla bark (used in vermouth), Turkish grapefruit and lemon peel.
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But there was less enthusiasm for middle distillates such as U.S. heating oil and European gasoil, notwithstanding the introduction of new ship fuel regulations at the start of next year which should boost consumption.
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Global inventories of refined products - made up from light and middle distillates like gasoline and diesel, as well as residual fuel such as fuel oil - have all fallen since the beginning of the month.
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Making matters worse, Morgan Stanley expects so-called middle distillates like diesel and jet fuel to account for most of the growth in oil demand, and light crudes aren't ideal for making these products.
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Prices were supported as U.S. oil stockpiles fell across the board last week with gasoline and distillates drawing down more than expected on stronger demand, according to data from the U.S. Energy Information Administration.
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Slower growth in global trade since the start of the year, and especially since the second quarter, is likely to be contributing to improved availability of distillates by moderating the increase in fuel consumption.
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"Refining margins are expected to improve led by middle distillates demand as the International Maritime Organization (IMO)'s shipping fuel rules set to take effect from 2020," the company said in an earnings statement.
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Some analysts have expressed concern that the regulations will create an acute shortage of middle distillates resulting in a surge in diesel and jet fuel prices and pulling up crude oil prices with them.
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Ships will be competing for the same low-sulphur middle distillates used as diesel, jet fuel and heating oil by road hauliers, railroads, airlines and farmers as well as many homes, offices and factories.
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Ships will be competing for the same low-sulfur middle distillates used as diesel, jet fuel and heating oil by road hauliers, railroads, airlines and farmers as well as many homes, offices and factories.
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Exxon's expansion project, which is expected to come online in 2023, would convert fuel oil and other residual crude products into higher-value lube base stocks and distillates to help meet stricter emissions rules.
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LONDON (Reuters) - Global manufacturing and trade volumes have been decelerating since the third quarter of 22018 and the slowdown is starting to show up in sluggish consumption of middle distillates such as gasoil and diesel.
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Middle distillates such as heating oil and gasoil are normally the most exposed to the economic cycle since their use is concentrated in freight, manufacturing, mining, and oil and gas production, as well as farming.
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Angola's medium-to-heavy grades, which tend to yield larger quantities of middle distillates such as gasoil and jet fuel, have drawn higher demand in 2019 as U.S. sanctions removed comparable Venezuelan and Iranian varieties.
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The tightness in the U.S. gasoline and distillates markets puts refiners on their best footing in three years heading into the winter months, Marathon Petroleum CEO Gary Heminger said in an earnings call last week.
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They are also anticipating that U.S. refineries will process record amounts of crude to stabilise gasoline inventories this summer and then build distillates stocks before new maritime fuel rules at the end of the year.
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But most IMO members are confident there will be enough low-sulfur fuel available to meet the needs of both the shipping industry and other users of middle distillates without an unacceptable spike in prices.
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Capacity increases in crude distillation as well as sulfur-removing hydrocracking and hydroprocessing would be enough to meet increased demand for low-sulfur distillates and fuel oil ("Assessment of fuel oil availability", CE Delft, 2016).
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U.S. refineries produced a record 5.4 million bpd of distillates in the last week of November, which was 53,000 bpd higher than the year before and almost 480,000 bpd above the 10-year seasonal average.
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The modest drop in U.S. gasoline demand was offset by strong demand for distillates, helping push total oil demand up by 2.1 percent in March versus last year, according to EIA's Petroleum Supply Monthly report.
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"To make a significant difference, you need a net draw of 1 or 2 million barrels across the crude, gasoline and distillates balances," said Phil Davis, trader at PSW Investments in Woodland Park, New Jersey.
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HOUSTON (Reuters) - Oil companies in Latin America are scrambling for gasoline and distillates cargoes for prompt delivery as damage from Hurricane Harvey hampers shipments from the U.S. Gulf Coast, according to offers seen by Reuters.
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Weakness in the oil complex started in October in gasoline and naphtha, a feedstock for petrochemicals, as refiners processed more light oil that gives a bigger yield on these products also known as light distillates.
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"To make a significant difference, you need a net draw of 22016 or 2820 million barrels across the crude, gasoline and distillates balances," said Phil Davis, trader at PSW Investments in Woodland Park, New Jersey.
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U.S. refiners operating complex plants with hydrocrackers and hydrotreaters that remove sulfur from distillates are positioned to profit from selling IMO 2020 fuels, analysts at Tudor Pickering, Holt & Co (TPH) said in a March report.
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The oil major has suspended loadings of oil products from the refinery, and traders in Asia, the Middle East and the United States have been looking to send middle distillates to Europe to fill the gap.
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Data showing crude inventories rose 234,0.23 barrels last week, much less than expectations, was overshadowed by reported builds of 8.4 million barrels in gasoline and over 6 million in distillates, which includes diesel and heating oil.
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Refineries have been ramping up distillate production ahead of the introduction of new IMO regulations for marine bunkers at the start of 2020, which will force many vessels to burn distillates rather than residual fuel oil.
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The Organization of the Petroleum Exporting Countries (OPEC) had already begun to achieve some of its aims, creating a virtual price floor of $1203 per barrel, David Fyfe told the Platts Middle Distillates conference in Antwerp.
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Refiners have been responding to price signals that have seen gasoline trade at an unusually large and prolonged discount to distillates in the last six months, with the price gap at times exceeding $20 per barrel.
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Prices of ultra-low sulfur diesel, also known as heating oil, rose 5 percent and hit 4-1/2-month highs after the EIA report showed an unexpected drop in stockpiles of distillates, which include diesel.
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Since almost all freight is moved by trucks, railroads, barges, ships and aircraft that use diesel or jet fuel made from middle distillates, the economic expansion should provide a big boost for distillate demand in 2018.
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"We see a risk of a spike in oil prices by year-end," said Bank of America Merrill Lynch, citing a weakening dollar and a surge in distillates demand due to rule changes for marine fuels.
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Refineries have been ramping up distillate production ahead of the introduction of new IMO regulations for marine bunkers at the start of 303, which will force many vessels to burn distillates rather than residual fuel oil.
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In the last year, the world economy has been growing at some of the fastest rates since the global financial crisis in 2008/09, helping drive a rapid rise in fuel consumption, especially for middle distillates.
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Midstream companies such as Magellan rushed to build condensate splitters during the shale boom earlier this decade to break light oil into products such as naphtha and unfinished distillates, which could be exported or sold domestically.
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NEW YORK (Reuters) - Oil prices turned positive on Wednesday after a bigger-than-expected decline in U.S. crude inventories along with surprise drawdowns in gasoline and distillates indicated strong demand in the world's top oil consumer.
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U.S. sanctions on the energy sectors of Iran and Venezuela have added to the drop in availability of the kind of crude oil that yields more valuable middle distillates, rather than cheaper fuels, such as gasoline.
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FGE analysts estimate that in 2020, the new rules could shift 700,103 barrels per day of demand from fuel oil to distillates, though the International Energy Agency has put it as high as 2 million bpd.
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In a monthly report, the Organization of the Petroleum Exporting Countries said the market could find support in winter from low distillate fuel stocks and forecasts of colder weather, which would boost distillates demand for heating.
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Midwest refiners ran their facilities near full tilt for much of January, averaging more than 96 percent capacity utilization compared with just under 91 percent last year, inundating the region with stocks of gasoline and distillates.
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The Dutch-German Rotterdam-Rijn Pijpleiding (RRP) distillates pipeline, partly owned by Royal Dutch Shell and BP, will be closed for at least a day as the company investigates the leak and makes any necessary repairs.
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Consumption of diesel and other mid-distillates has been hit by a warm winter across the northern hemisphere as well as stagnant or falling freight demand in the United States and around much of the globe.
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LONDON (Reuters) - Hedge fund managers had largely completed the recent wave of selling in crude oil futures and options by the middle of last week but there were heavy sales of derivatives linked to middle distillates.
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A shift toward imports of lighter grades of crude may also act as a spur to gasoline exports, given light crudes produce more gasoline and naphtha and less middle distillates, such as diesel and jet kerosene.
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Fellow refiner Bangchak Petroleum PCL also plans to debottleneck its refinery by 2020 so that it can run at 130,000-bpd, up 20,000 bpd from current levels, and increase its output of light and middle distillates.
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Colonial said it would explore potential options to operate parts of its gasoline pipe, called line 1, and would evaluate shipping gasoline on the distillates pipe, line 2, which was briefly shut overnight by the incident.
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As LPG supply expands, the price gap between the two fuels will widen and this could set off a chain reaction within the light distillates complex, said Sushant Gupta, downstream research director at consultant Wood Mackenzie.
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A couple of days into my visit, Lopez arrived in town, and she took me to El Destilado, a new spot that focusses on uncertified, nano-batch mezcals—the agave distillates that may be rechristened komil .
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Do you have access to terpenes, cannabinoids, distillates, tinctures, and any strain of bud you desire and are looking for new techniques that will put them on your home table or turn them into professional-level edibles?
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U.S. oil stocks fell more than expected, continuing a steady drawdown of supplies in the world's largest oil consumer, though stocks of distillates and gasoline rose on heavy refining activity driven in part by year-end adjustments.
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Urdapilleta joined Trafigura almost 10 years ago and has worked in Buenos Aires, Geneva, Singapore and across biodiesel, distillates, naphtha, condensates and crude – as well as most recently managing the oil trading division in Asia, she added.
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"In the week past, strong demand for refined products, especially distillates, continued to incent refiners to process crude oil at increasing rates," said David Thompson, executive vice president at Powerhouse, an energy-specialized commodities broker in Washington.
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The overhang in developed economies of middle distillates, which include diesel and heating oil, is at around 72 million barrels or around four days of consumption, a reasonable level given limited spare refining capacity, according to Fyfe.
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For instance, oil trader Glencore has reduced its storage lease volume of middle distillates, while oil trader Vitol may be giving up some tank space for fuel oil though discussions are still ongoing, the three traders said.
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The decline in inventories was led by distillates, sinking to a more than nine-month low of 803,163 million barrels, an residual fuels that slipped to a six-month low of 18.539 million barrels, the data showed.
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Data showing that crude inventories rose 234,000 barrels last week, much less than expectations, was overshadowed by reported builds of 8.4 million barrels in gasoline and over 6 million in distillates, which includes diesel and heating oil.
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Still, the soft summer demand season for distillates had tempered the impact of the closure on local German markets, and sources said oil products could also be delivered via barges when the pipeline is not fully operational.
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In a sign that distillates are becoming more plentiful, hedge fund managers have cut their net bullish position in European gasoil by 50 million barrels since late May and in U.S. heating oil by 30 million barrels.
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The new mega-refineries in the Middle East and Asia have all been planned to maximise the production of middle distillates for the transport market in anticipation of new IMO rules and projected increases in freight demand.
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" Pedro Jiménez, a filmmaker and bar owner who lives in Jalisco and champions the agave distillates made there, told me, "Tequila was just another type of mezcal, and now they're trying to abduct the word from them.
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"A whopping drop in imports has resulted in a moderate draw to crude stocks, while a drop in both gasoline and distillates inventories round out a broadly supportive report," said Matt Smith, director of commodity research at Clipperdata.
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The biggest change is in middle distillates, where slower economic growth is cutting demand for diesel, which is often described as an industrial fuel given its role in rail and road transportation, and powering construction and other machinery.
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Both countries are subject to U.S. sanctions and both export heavier grades of crude that are preferred by many of Asia's more advanced refineries because of their higher yields of middle distillates such as diesel and jet kerosene.
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Data showing that U.S. crude inventories rose 234,000 barrels last week, much less than expectations, was overshadowed by reported builds of 8.4 million barrels in gasoline and over 6 million in distillates, which includes diesel and heating oil.
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"Domestic margins for gasoline and light distillates were excellent in July to September when they hovered at more than 225 yen ($22.393) (per liter)" Katsuyuki Ota, a senior vice president at JXTG told an earnings briefing on Friday.
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On a worldwide basis, gasoline rather than middle distillates has accounted for the fastest oil consumption growth last year because distillate demand has been hit by the global freight slowdown and a warm winter in the northern hemisphere.
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This means that Asian refiners may be increasingly tempted to buy more light crudes in order to maximise the production of naphtha and gasoline, while still getting good volumes of middle distillates such as diesel and jet kerosene.
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NAF-SIN-CRK "Refining margins appear to have been supported by a combination of factors, including seasonally-stronger demand for gasoline and (middle) distillates, particularly across the emerging markets," said Peter Lee, oil & gas analyst of BMI Research.
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"A whopping drop in imports has resulted in a moderate draw to crude stocks, while a drop in both gasoline and distillates inventories round out a broadly supportive report," said Matt Smith, director of commodity research at ClipperData.
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In addition, there are longstanding accusations that Prepa's fuel-purchasing office for many years bought dirty oil sludge as fuel, charged consumers the much higher price of cleaner distillates, and then created a slush fund with the difference.
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One of three Seedlip blends distilled in a copper-pot still in England, Spice 94 features a bracing blend of botanicals including Jamaican allspice; grapefruit and lemon peel; cardamom distillates, and two types of bark (oak and cascarilla).
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The views expressed are his own) By John Kemp LONDON (Reuters) - U.S. refineries have cut the volume of crude processed so far this year, but stocks of gasoline and distillates remain ample, highlighting the slack demand for transportation fuels.
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Oil also drew support from the unexpected drop in U.S. crude inventories, and larger than expected falls in stocks of gasoline and distillates, reported this week, which raised hopes that a long-awaited market rebalancing is finally under way.
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Chinese refineries have been producing gasoline to meet strong domestic demand, but because many of the plants, especially newer units, were designed to maximize middle distillates, they have produced more diesel and jet fuel than the local market required.
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"Storage in this backwardated market makes no sense as we won't be able to recoup the costs to store the oil," said a Singapore-based trader in middle distillates, a group of oil products including gasoil and jet fuel.
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Oil prices maintained gains after U.S. government data indicated bullish demand for gasoline and distillates, which overshadowed a surprise build in U.S. crude inventories and U.S. crude oil production's hitting 11 million barrels per day for the first time.
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But he said fuel oil gains were unlikely to hold for long due to new marine fuel regulations requiring the use of fuel with a lower sulfur content than fuel oil and encouraging usage of middle distillates from 2020.
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Oil has strengthened in recent weeks due to a sharp drawdown in distillates, feeding expectations for renewed demand, but it is unclear whether U.S. crude prices will regain the high of nearly $53 a barrel reached in late September.
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A warm winter across the northern hemisphere kept households from burning heating oil at the usual pace, meaning stocks of distillates did not draw down as much as they normally would over the winter and the refinery maintenance season.
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Gasoline futures rose as much as 248 percent in early trading on Sunday evening, and heating oil futures, a proxy for distillates like diesel fuel, were up as much as 2911 percent, as supplies are expected to be curtailed.
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Some refiners have invested in cutting sulfur in their output, but fitting hydrocracker or coker unit so that a refinery produces more distillates with lower sulfur content while reducing fuel oil output can cost about $1 billion, analysts say.
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NEW YORK (Reuters) - Oil prices rose on Wednesday after U.S. government data indicated bullish demand for gasoline and distillates, which overshadowed a surprise build in U.S. crude inventories and U.S. crude oil production hitting 11 million bpd for the first time.
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Zahir said the market was experiencing a momentum trade in spot crude helped by a weaker dollar, while longer-dated oil remained in contango, or pricier to the spot contract, due to builds in products such as gasoline and distillates.
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At the same time, an unexpected shortfall in diesel and jet fuel crept in, buoyed by strikes that closed four French refineries and extreme heat from El Nino that boosted distillates burned in power generators in India, Pakistan and Vietnam.
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The decline in inventories was led by distillates , sinking to a more than nine-month low of 10,163 million barrels, an residual fuels that slipped to a six-month low of 18.539 million barrels, the data showed.
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Detailed figures for December will only be available later this month, but working on the 2015 average and it becomes clear that exports of middle distillates now dominate China's outbound fuel shipments, accounting for about 58 percent of the total.
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Looking forward, the firm may beef up products trading once more after its Star refinery in Turkey starts up, including a return to middle distillates depending on possible export volumes and how the market looks after the IMO change, they said.
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The restrictions on the energy sectors of Iran and Venezuela by the United States have added to the drop in availability of the kind of crude oil that yields more valuable middle distillates, rather than cheaper fuels, such as gasoline.
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"The distillates market will temporarily tighten because of the refinery turnarounds in the United States and Europe in September and October and in the Middle East in November and December," said Steve Sawyer, head of refining analysis at consultancy FGE Energy.
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Booming demand for gasoline and octane, the leveling out of Brent crude versus WTI and even the weak euro, will all help buoy even Europe's aging units through the year, according to speakers at the Platts Middle Distillates conference in Antwerp.
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On Monday, trader AOT Energy separately said it had reduced some staff, including parting ways with its senior management team in Houston, and earlier this year pared its European distillates and U.S. Gulf Coast fuel oil business due to shrinking margins.
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Distiller Raña Zorrilla, who joined the team just three years ago fresh out of college, taps into his food chemistry education to oversee quality, tasting new distillates as they come in to ensure that every bottle tastes like the next.
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LONDON (Reuters) - Cyclical indicators point to slower and more uneven growth in the global economy for the rest of this year and into 2019, which means the rise in oil consumption is likely to moderate, especially for distillates like diesel.
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The exchange of futures for swaps (EFS), a contract that traders typically deal in to hedge their Asia-Europe arbitrage cargoes, fell to minus $5.23 a tonne from minus 50 cents a tonne on Friday, a middle distillates broker said.
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Saudi Aramco and its partners recently opened massive new refineries in the Middle East that were built to produce more than 60 percent middle distillates, while companies including ExxonMobil, Total, Galp and Repsol invested in European refineries to boost diesel.
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But perhaps the biggest potential upside for Asian refiners is the prospect of sharply lower product exports from China, which has emerged in recent years as a major supplier of gasoline and middle distillates such as diesel and jet fuel.
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The IEA's view is that Asia is likely to be structurally short of light distillates in coming years, mainly because of rising demand for naphtha, but also for gasoline as more consumers moves into the middle class and buy cars.
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U.S. sanctions on the energy sectors of Iran and Venezuela have helped to reduce the availability of the kind of crude oil that yields more valuable middle distillates, such as jet fuel and diesel, rather than cheaper fuels, such as gasoline.
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Oil prices rose 1.0 percent overnight after U.S. government data indicated bullish demand for gasoline and distillates, which overshadowed a surprise build in U.S. crude inventories and U.S. crude oil production's hitting 11 million barrels per day for the first time.
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Texas is often thought of as a center of oil production, but the Houston area and the nearby Gulf Coast is where much of that black gold is turned into refined products like gasoline, diesel fuel, heating oil, and other distillates.
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DUBAI/SINGAPORE (Reuters) - Saudi Arabia raised on Monday its light crude prices for sales to Asia in January to the highest in six years, tracking gains in the Middle East crude benchmark and higher margins for light distillates last month.
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GS Caltex, South Korea's second-largest oil refiner, this week said it was unsure when it would be able to restart a middle distillates producing hydrocracker unit which was hit by a fire last month, with exports likely to be crimped.
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The profit they can make for producing distillates HOc216-CLc22 - a group of fuels that includes diesel and heating oil, and one of the key measures for refinery margins - reached a three-year high for April of $21.73 on April 11.
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Oil prices rose 1.0 percent after U.S. government data indicated bullish demand for gasoline and distillates, which overshadowed a surprise build in U.S. crude inventories and U.S. crude oil production's hitting 11 million barrels per day for the first time.
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LONDON (Reuters) - Global trade flows are flat or falling in all major regions as the world economy flirts with recession for the first time since 2008/09 - which will cut growth in oil consumption, especially for mid-distillates such as diesel.
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Prices pared some gains in after market trade after data from the American Petroleum Institute showing an unexpected draw in U.S. crude stockpiles was overshadowed by surprise hefty builds in gasoline and distillates, indicating the glut in refined oil products was growing.
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The contrasting fortunes of gasoline and middle distillates in Asia is a reflection of the struggles Asian refiners are having in adapting to the conflicting aims of the governments of the major oil producers, namely the United States, Russia and Saudi Arabia.
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BASF said the two Ludwigshafen steam crackers, which turn oil distillates into basic petrochemical building blocks for anything from plastics and coatings to solvents, would gradually resume output over the next few days because alternative supply lines will circumvent the disaster area.
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The independent refiners, which had relied on residual fuel as a feedstock before Beijing opened up crude imports last year, were mostly designed to maximise production of middle distillates such as diesel and jet fuel instead of light products like naphtha and gasoline.
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" According to ITC, the Deer Park terminal opened in 1972 and has capacity for 2.2 million cubic meters -- more than a half-billion gallons -- of storage for "all kinds of petrochemical liquids and gases, as well as fuel oil, bunker oil and distillates.
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He's a completist—or to put it less delicately, an obsessive—and his interest in absinthe runs the gamut from the Technicolor bitters to the aged, small-batch distillates (a couple of which he has worked with Žufánek to produce specifically for Absintherie).
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While data showed U.S. crude inventories rose 13,000 barrels last week, less than expected, the numbers were overshadowed by a reportedly massive build-up in gasoline at 8.4 million barrels and over 6 million in distillates, which includes diesel and heating oil.
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"Looking forward, a healthy global economic forecast for 2000, positive car sales data in recent months, stronger 22.86 yea-on-year U.S. product consumption in January and potentially tighter global product markets are expected to boost gasoline and distillates demand ...," OPEC said.
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Data showing that crude inventories USOILC=ECI rose 234,000 barrels last week, much less than expectations, was overshadowed by reported builds of 8.4 million barrels in gasoline USOILG=ECI and over 6 million in distillates, which includes diesel and heating oil USOILD=ECI.
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Record stock builds in crude and oil products will continue through the bulk of 923, David Fyfe, Gunvor's head of market research and analysis, and Richard de Caux, head of refining economics with BP, said at the Platts Middle Distillates Conference in Antwerp.
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" According to ITC, the Deer Park terminal opened in 1972 and has capacity for 2.2 million cubic meters -- more than a half billion gallons -- of storage for "all kinds of petrochemical liquids and gases, as well as fuel oil, bunker oil and distillates.
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Colonial Pipeline, the largest American fuel system, said on Monday it would restart a segment of its pipeline in Texas that had been cut off, enabling it to restore the flow of distillates such as diesel fuel from Texas to New Jersey.
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This equates to about 1.03 million bpd of product exports, with Chinese refiners likely to be keen to sell into the strong regional market for middle distillates such as diesel and jet fuel, where the profit margins are at, or close to, four-year highs.
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NEW YORK (Reuters) - Inventories for distillates, which include products such as diesel and jet fuel, are at their highest on record in the U.S. Midwest as the region gears up for heavy refinery maintenance and a strong soybean and corn harvest, market participants said.
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Global demand growth is higher than that seen in the last couple of years, "coming somewhere close to 1.6 to 1.7 million barrels per day and is driven by distillates", Janet Kong, BP's chief executive, supply and trading, Eastern Hemisphere, told the Singapore conference.
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SINGAPORE (Reuters) - Singapore will extend the mandatory use of mass-flow-meters to bunker barges delivering distillate fuels to large ships, the port authority said on Friday, ahead of an expected pick-up in the use of distillates to meet caps on sulfur content.
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"This will also prepare the industry for an expected increase in delivery of distillates with the introduction of a 0.5 percent global sulfur cap from 1 January 2020 by the International Maritime Organization (IMO)," said Captain M. Segar, assistant chief executive at the MPA.
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"Global demand growth is way higher than what we have observed in the last couple of years, coming somewhere close to 1.6 to 1.7 million barrels per day and is driven by distillates", said Janet Kong, BP's chief executive officer, supply and trading, Eastern Hemisphere.
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"Any changes to our current 2016 global demand outlook are now more likely to be upwards than downwards, as gasoline demand grows strongly in nearly every key market, more than offsetting weakness in middle distillates," the IEA said in its monthly Oil Market Report.
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Every ten seconds someone in the US purchases one of Organa's products, be it a dab, energy drink or gummy bear, but it is Organa's ultra-pure cannabis oil distillates—the golden syrup being put into those vials—that really makes the laboratory tick.
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Positions and prices are delicately poised between worries over the global economic slowdown and concerns about future supply disruptions stemming from conflict around the Gulf and shortages of middle distillates caused by the introduction of new marine fuel regulations from the start of 2020.
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"Gasoline is the most consumed product, so that wouldn't necessarily solve the pollution problem," said David Bleasdale, executive director of consultancy CITAC, saying Nigerian gasoline consumption was about 323,055 barrels per day (bpd) in 2016 compared with 71,657 bpd of distillates, such as diesel.
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The quality of the condensate could not immediately be confirmed, but a trader said the API is likely around 50 and it has 50 percent to 60 percent yield of naphtha and 35 percent of middle distillates which comprise mainly diesel and jet fuel.
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So far in April, East Coast exports of middle distillates like jet fuel and diesel are more than 100,000 barrels per day, up from an average of 163,000 barrels a day in the first quarter, said Matt Smith, director of commodity research at ClipperData.
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"Any changes to our current 232.76 global demand outlook are now more likely to be upwards than downwards, as gasoline demand grows strongly in nearly every key market, more than offsetting weakness in middle distillates," the IEA said in its monthly Oil Market Report.
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NEW YORK (Reuters) - Prices for jet fuel for later this year and into 231 are expected to rise due to new marine fuel regulations - as the need for lower-sulfur fuels in ships cuts into the available supply for similar distillates like diesel or jet fuel.
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SINGAPORE (Reuters) - Top oil exporter Saudi Arabia is expected to reduce prices for most of the crude grades it sells to Asia in March to track a weaker Middle East benchmark Dubai and lower refinery margins for light and middle distillates, trade sources said on Monday.
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Colonial Pipeline, the biggest U.S. fuel system, expects to reopen a Texas segment of its network on Monday, when it will resume transporting distillates from Houston to Hebert, Texas, the company said on Sunday, adding that it would be ready to start moving gasoline on Tuesday.
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Refiners have some flexibility to change the ratio in which they produce light and middle distillates by altering the slate of crudes they process and running their fluid catalytic cracking (FCC) units in max-distillate rather than max-gasoline mode but the flexibility is quite limited.
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Singapore's Maritime Port Authority (MPA) said it would extend the mandatory use of MFMs to bunker barges delivering distillate fuels to large ships from July 1, 2019, ahead of an expected pick-up in the use of distillates to meet caps on sulfur content in marine fuels.
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Traders and analysts said such lopsided demand could depress diesel profits for at least another year, as refineries running for gasoline are configured in such a way that they cannot produce it without pumping out thousands of barrels of middle distillates that the world is not consuming.
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"I think the liquidity is still very low now so it will be a challenge for them to get interest, but that could potentially change if a market is established like here in Singapore since (Middle East) already has storage," a Singapore-based middle distillates trader said.
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Colonial Pipeline shut down its main gasoline and distillates pipelines on Monday after an explosion and fire in Shelby, Alabama, killing a worker and sending five to the hospital — the second time in two months it had to close the crucial supply line to the U.S. East Coast.
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So far this year China has already been ramping up exports of middle distillates, with diesel shipments rising 736 percent to 1.52 million tonnes in the first two months of the year compared to the same period last year, while jet kerosene gained 28.8 percent to 1.92 million tonnes.
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Positioning risks are still concentrated on the downside, however, with hedge fund long positions outnumbering shorts by 7:1 in crude, 31:1 in gasoline and 4:1 in distillates, which could generate a sharp pull back in prices if the economy does deteriorate as much as some analysts fear.
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Pemex's domestic refining network worked at 57 percent of its 1.63-million-barrels-per-day capacity in the first half due to a fire at its largest facility in June and a recent strategy change to ramp up production of high-value distillates by limiting the processing of heavy domestic crudes.
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Refiners that have plants set up to process heavy crudes are reluctant to switch to light grades as this will reduce their efficiencies, and also lead to the production of increased volumes of light products such as gasoline, and not enough of middle distillates such as diesel and jet fuel.
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Proposed regulations, backed by the tequila industry, would rename the agave distillates by an obscure Náhuatl word, komil , and forbid producers to advertise that their products contain ingredients used in either the tequila or the mezcal D.O. Some see the proposal as the latest in a long line of exclusions.
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A more diverse crude diet would allow Pemex to reach the goal of producing 60-70 percent of distillates versus 50 percent in recent years, just as the country is liberalizing fuel prices at gas stations amid an energy reform that will give foreign refiners and retailers a portion of market share.
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"As more refineries come on and as more light sweet materials come on ... It is going to tend to weigh heavily on that part of the barrel, which in turn essentially puts all of the onus on distillates to make the refinery margin in 2020," Hardy told the Reuters Commodities Summit in October.
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But attacks last month on two major oil facilities in Saudi Arabia led to a surge in exports from Europe to the Mideast Gulf, helping keep margins unseasonably buoyant.. (Graphic - European Light Distillate Cracks: here) Also boosting refiners is rising demand for distillates in preparation for the International Maritime Organization's new maritime fuel rules.
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Storage rates for middle distillates have dropped to about S$21 ($21) to S$22 per cubic meter from S$7.50 to S$8.50 around 1 to 2 years ago, while fuel oil tank rates have fallen to about S$5 to S$6 from S$13 to S$7 a few years ago, they said.
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"We are all agave distillates," he said, explaining that the use of the term "agave" by uncertified and possibly unscrupulous distillers encroached on the D.O. In December, he said, the C.R.M. conducted a study of the marketplace and found that nearly half the mezcals for sale were illegitimate—untested fakes, any one of which could have been contaminated with methanol.
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"It says less product will be coming down the pipe but we are already dealing with very high inventories in gasoline and distillates for this time of year," said Donald Morton, who runs an energy trading desk at investment banking firm H.J. Sims & Co. Distillate stockpiles, which include diesel and heating oil, fell by 617,000 barrels, versus expectations for a 229,000-barrel drop, the EIA data showed.
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ASSESSMENTS MID-DISTILLATES CASH ($/T) ASIA CLOSE Change % Change Prev Close RICSpot Gas Oil 0.5% 79.39 2.13 2.76 77.26 GO 13 Diff -2.61 -0.01 0.38 -2.60 Spot Gas Oil 0.25% 79.74 2.05 2.64 77.69 GO 0.25 Diff -2.26 -0.09 4.15 -2.17 Spot Gas Oil 0.05% 80.62 2.21 13 78.41 GO 0.05 Diff -1.38 0.07 -4.83 -1.45 Spot Gas Oil 0.001% 13 2.12 2.67 79.51 GO 0.001 Diff -0.37 -0.02 5.71 -0.35 Spot Jet/Kero 80.66 2.10 2.67 21 Jet/Kero Diff -22 21 -22 -21 For a list of derivatives prices, including margins, please double click the RICs below.
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ASSESSMENTS MID-DISTILLATES CASH ($/T) ASIA CLOSE Change % Change Prev Close RICSpot Gas Oil 0.5% 78.91 -0.48 -0.60 79.39 GO 13 Diff -2.62 -0.01 0.38 -2.61 Spot Gas Oil 0.25% 79.27 -0.47 -0.59 79.74 GO 0.25 Diff -2.27 -0.01 0.44 -2.26 Spot Gas Oil 0.05% 80.32 -0.30 -13 80.62 GO 0.05 Diff -1.22 0.16 -11.59 -1.38 Spot Gas Oil 0.001% 13 -0.52 -0.64 81.63 GO 0.001 Diff -0.42 -0.05 13.51 -0.37 Spot Jet/Kero 80.11 -0.55 -0.68 21 Jet/Kero Diff -22 -21 22 -21 For a list of derivatives prices, including margins, please double click the RICs below.
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ASSESSMENTS MID-DISTILLATES CASH ($/T) ASIA CLOSE Change % Change Prev Close RICSpot Gas Oil 0.5% 79.31 0.93 1.19 78.38 GO 13 Diff -2.49 0.01 -0.40 -2.50 Spot Gas Oil 0.25% 79.73 1.09 1.39 78.64 GO 0.25 Diff -2.07 0.16 -7.17 -2.23 Spot Gas Oil 0.05% 80.75 0.92 13 79.83 GO 0.05 Diff -1.05 0.00 0.00 -1.05 Spot Gas Oil 0.001% 13 0.93 1.15 80.52 GO 0.001 Diff -0.35 0.01 -2.78 -0.36 Spot Jet/Kero 80.22 0.85 1.07 21 Jet/Kero Diff -22 -21 22 -21 For a list of derivatives prices, including margins, please double click the RICs below.
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ASSESSMENTS MID-DISTILLATES CASH ($/T) ASIA CLOSE Change % Change Prev Close RICSpot Gas Oil 0.5% 80.05 0.74 0.93 79.31 GO 13 Diff -2.40 0.09 -3.61 -2.49 Spot Gas Oil 0.25% 80.52 0.79 0.99 79.73 GO 0.25 Diff -1.93 0.14 -6.76 -2.07 Spot Gas Oil 0.05% 81.42 0.67 13 80.75 GO 0.05 Diff -1.02 0.03 -2.86 -1.05 Spot Gas Oil 0.001% 13 0.69 0.85 81.45 GO 0.001 Diff -0.31 0.04 -11.43 -0.35 Jet/Kero Diff -22 21 -22 -21 For a list of derivatives prices, including margins, please double click the RICs below.
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ASSESSMENTS MID-DISTILLATES CASH ($/T) ASIA CLOSE Change % Change Prev Close RICSpot Gas Oil 0.5% 76.47 1.86 2.49 74.61 GO 13 Diff -2.71 0.01 -0.37 -2.72 Spot Gas Oil 0.25% 77.00 1.86 2.48 75.14 GO 0.25 Diff -2.18 0.01 -0.46 -2.19 Spot Gas Oil 0.05% 77.56 1.87 13 75.69 GO 0.05 Diff -1.62 0.02 -1.22 -1.64 Spot Gas Oil 0.001% 13 1.89 2.46 76.90 GO 0.001 Diff -0.39 0.04 -9.30 -0.43 Spot Jet/Kero 77.84 1.82 2.39 21 Jet/Kero Diff -22 21 -22 -21 For a list of derivatives prices, including margins, please double click the RICs below.
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ASSESSMENTS MID-DISTILLATES CASH ($/T) ASIA CLOSE Change % Change Prev Close RICSpot Gas Oil 0.5% 80.58 0.91 1.14 79.67 GO 13 Diff -2.26 -0.01 0.44 -2.25 Spot Gas Oil 0.25% 81.06 0.94 1.17 80.12 GO 0.25 Diff -1.78 0.02 -1.11 -1.80 Spot Gas Oil 0.05% 81.97 0.93 13 81.04 GO 0.05 Diff -0.87 0.00 0.00 -0.87 Spot Gas Oil 0.001% 13 0.94 1.15 81.78 Spot Jet/Kero 80.85 1.05 1.32 21 Jet/Kero Diff -22 -21 22 -21 For a list of derivatives prices, including margins, please double click the RICs below.
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ASSESSMENTS MID-DISTILLATES CASH ($/T) ASIA CLOSE Change % Change Prev Close RICSpot Gas Oil 0.5% 77.82 -2.08 -2.60 79.90 GO 13 Diff -2.40 0.01 -0.41 -2.41 Spot Gas Oil 0.25% 78.32 -2.07 -2.57 80.39 GO 0.25 Diff -1.90 0.02 -1.04 -1.92 Spot Gas Oil 0.05% 79.18 -2.08 -13 81.26 GO 0.05 Diff -1.04 0.01 -0.95 -1.05 Spot Gas Oil 0.001% 13 -2.03 -2.47 82.08 GO 0.001 Diff -0.17 0.07 -29.17 -0.24 Spot Jet/Kero 78.22 -2.31 -2.87 21 Jet/Kero Diff -22 21 -22 -21 For a list of derivatives prices, including margins, please double click the RICs below.
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ASSESSMENTS MID-DISTILLATES CASH ($/T) ASIA CLOSE Change % Change Prev Close RICSpot Gas Oil 0.5% 79.07 1.25 1.61 77.82 GO 13 Diff -2.35 0.05 -2.08 -2.40 Spot Gas Oil 0.25% 79.56 1.24 1.58 78.32 GO 0.25 Diff -1.86 0.04 -2.11 -1.90 Spot Gas Oil 0.05% 80.47 1.29 13 79.18 GO 0.05 Diff -0.95 0.09 -8.65 -1.04 Spot Gas Oil 0.001% 13 1.21 1.51 80.05 GO 0.001 Diff -0.16 0.01 -5.88 -0.17 Spot Jet/Kero 79.38 1.16 1.48 21 Jet/Kero Diff -22 21 -22 -21 For a list of derivatives prices, including margins, please double click the RICs below.
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ASSESSMENTS MID-DISTILLATES CASH ($/T) ASIA CLOSE Change % Change Prev Close RICSpot Gas Oil 0.5% 79.67 0.60 0.76 79.07 Spot Gas Oil 0.25% 80.12 0.56 0.70 79.56 GO 0.25 Diff -1.80 0.06 -3.23 -1.86 Spot Gas Oil 0.05% 81.04 0.57 13 80.47 GO 0.05 Diff -0.87 0.08 -8.42 -0.95 Spot Gas Oil 0.001% 13 0.52 0.64 81.26 GO 0.001 Diff -0.13 0.03 -18.75 -0.16 Spot Jet/Kero 79.80 0.42 0.53 21 Jet/Kero Diff -22 -21 22 -21 For a list of derivatives prices, including margins, please double click the RICs below.
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ASSESSMENTS MID-DISTILLATES CASH ($/T) ASIA CLOSE Change % Change Prev Close RICSpot Gas Oil 0.5% 78.96 -1.62 -2.01 80.58 GO 13 Diff -2.30 -0.04 1.77 -2.26 Spot Gas Oil 0.25% 79.36 -1.70 -2.10 81.06 GO 0.25 Diff -1.90 -0.12 6.74 -1.78 Spot Gas Oil 0.05% 80.16 -1.81 -13 81.97 GO 0.05 Diff -1.10 -0.23 26.44 -0.87 Spot Gas Oil 0.001% 13 -1.74 -2.10 82.72 GO 0.001 Diff -0.28 -0.16 133.33 -0.12 Spot Jet/Kero 79.21 -1.64 -2.03 21 Jet/Kero Diff -22 -21 22 -21 For a list of derivatives prices, including margins, please double click the RICs below.
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ASSESSMENTS MID-DISTILLATES CASH ($/T) ASIA CLOSE Change % Change Prev Close RICSpot Gas Oil 0.5% 78.38 -0.53 -0.67 78.91 GO 13 Diff -2.50 0.12 -4.58 -2.62 Spot Gas Oil 0.25% 78.64 -0.63 -0.79 79.27 GO 0.25 Diff -2.23 0.04 -1.76 -2.27 Spot Gas Oil 0.05% 79.83 -0.49 -13 80.32 GO 0.05 Diff -1.05 0.17 -13.93 -1.22 Spot Gas Oil 0.001% 13 -0.59 -0.73 81.11 GO 0.001 Diff -0.36 0.06 -14.29 -0.42 Spot Jet/Kero 79.37 -0.74 -0.92 21 Jet/Kero Diff -22 21 22 -21 For a list of derivatives prices, including margins, please double click the RICs below.
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ASSESSMENTS MID-DISTILLATES CASH ($/T) ASIA CLOSE Change % Change Prev Close RICSpot Gas Oil 0.5% 79.06 0.10 0.13 78.96 GO 13 Diff -2.31 -0.01 0.43 -2.30 Spot Gas Oil 0.25% 79.46 0.10 0.13 79.36 GO 0.25 Diff -1.91 -0.01 0.53 -1.90 Spot Gas Oil 0.05% 80.22 0.06 13 80.16 GO 0.05 Diff -1.15 -0.05 4.55 -1.10 Spot Gas Oil 0.001% 13 0.10 0.12 80.98 GO 0.001 Diff -0.29 -0.01 3.57 -0.28 Spot Jet/Kero 79.06 -0.15 -0.19 21 Jet/Kero Diff -22 21 22 -21 For a list of derivatives prices, including margins, please double click the RICs below.
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ASSESSMENTS MID-DISTILLATES CASH ($/T) ASIA CLOSE Change % Change Prev Close RICSpot Gas Oil 0.5% 77.26 0.79 1.03 76.47 GO 13 Diff -2.60 0.11 -4.06 -2.71 Spot Gas Oil 0.25% 77.69 0.69 0.90 77.00 GO 0.25 Diff -2.17 0.01 -0.46 -2.18 Spot Gas Oil 0.05% 78.41 0.85 13 77.56 GO 0.05 Diff -1.45 0.17 -10.49 -1.62 Spot Gas Oil 0.001% 13 0.72 0.91 78.79 GO 0.001 Diff -0.35 0.04 -10.26 -0.39 Spot Jet/Kero 78.56 0.72 0.92 21 Jet/Kero Diff -22 21 -22 -21 For a list of derivatives prices, including margins, please double click the RICs below.
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LONDON, Feb 9 (Reuters) - * Poland's PKN Orlen is building a clean fuels upgrading unit at its 330,000 barrel per day (bpd) Plock refinery this year as oil companies across Europe prepare for stricter environmental rules on shipping from 2020 * The unit, a visbreaker, helps cut output of sulphur-rich fuel oil in favour of more valuable cleaner products such as distillates * A spokesman said the company is investing 600 million zloty ($176 million) with completion expected by the end of 2020 * It has said the visbreaker will enable an additional product yield of 1,200 tonnes per day * From 2020, the International Maritime Organization (IMO) will slash the amount of sulphur that can be emitted from ships, which is expected to cut demand for fuel oil and has created a serious challenge for refiners * Companies including ExxonMobil and Total have invested in refinery upgrades to produce lower sulphur fuels in advance of the new shipping rules and also tighter limits worldwide on sulphur in automotive fuels ($1 = 3.4123 zlotys) (Reporting by Libby George; editing by Jason Neely)
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