MARKETWIRE ALERTS

MARKETWIRE ALERTS 

MarketWire Afternoon News for November 14th

Updated at 5:00 PM ET 

HEADLINES:

—  Chicago ULSD Hits Two-Year High on Last Cycle 2 Trade

—  Baker Hughes: North America Rig Count Down 2 Last week

—  EIA Adjusts U.S. Crude Oil Production 206 KBD Higher

—  BTS: Sept. N. American Freight DN 6.2% on Year to $127.8B

—  Analysis: Cracks Soar as Crude and Product Prices Diverge

—  Blackstone Greenlights $1.2B West Virginia 600Mw Gas Plant

—  EIA reports 45 Bcf Injection into US NatGas Storage Last Wk

—  Phillips 66 Reports Flaring at Wilmington Refinery

NEWS:

Chicago ULSD Hits Two-Year High on Last Cycle 2 Trade

Basis for ULSD in Chicago spot markets surged 9.5cts for cycle two November pipeline deliveries on Friday, with market focus to turn to cycle three November pipeline scheduling on Monday.

The spike brought basis for ULSD in Chicago to a 16cts premium against December ULSD futures on the New York Mercantile Exchange (NYMEX) according to DTN Energy data. That marked a two-year closing high and 32cts above the same day in the previous year, when basis for ULSD in Chicago was negative 16cts.

Friday’s upward was in follow-through to Thursday’s trade, when the premium rose 6.5cts. The move over the two sessions occurred as markets headed into the cycle two delivery period.

Looking ahead, cycle three trade indications showed values easing to an 8cts premium to December ULSD futures.

Baker Hughes: North America Rig Count Down 2 Last week

North American drilling activity fell this week, with a net loss of two rigs across the U.S. and Canada to 737, according to Baker Hughes data released Friday (11/14).

Total rigs operating in the United States rose by one to 549, while staying 35 below the same week last year.

In the U.S., oil-directed rigs rose by three to 417, while gas rigs fell by three to 125 week-over-week. Miscellaneous rigs climbed by one to seven.

On the North American front, land-based drilling was unchanged at 527. Offshore activity was flat too at 19 while inland waters saw an addition of one rig at three. The Gulf of Mexico rig count saw no change at 12.

Canada’s total rig count fell by three to 188, with oil-directed rigs down five at 124. Gas rigs climbed by two to 64. Total rigs for Canada were 12 below last year’s level.

EIA Adjusts U.S. Crude Oil Production 206 KBD Higher

The U.S. Energy Information Administration has raised crude oil production estimates by 206,000 bpd in its latest weekly report – continuing with its trend of catching up with output growing faster than anticipated.

The hike of 1.5%, which brings crude production to 13.862 million bpd, was in the Weekly Petroleum Status Report released by the EIA on Thursday (11/13). 

The re-benchmarking coincided with the EIA’s Short-Term Energy Outlook for November – separately released on Thursday — which contained an upward revision as well to U.S. crude oil production estimates as output continued to surprise to the upside.

Underestimated crude oil production may in part explain the consistent positive adjustment factor the EIA had to apply to their weekly data sets. Inventories have been expanding more than expected amid falling imports, rising exports and stable refinery runs.

Over the past four weeks, net crude oil imports have averaged 1.59 million bpd, down more than 1 million bpd, or 39%, from the same period in 2024.

Crude inputs into refineries, meanwhile, were trailing year-ago levels by 4.3% on the four-week average.

Despite this, commercial inventories were still 4.76 million bbl higher than four weeks ago, likely a result of U.S. crude production outperforming past weekly estimates.

Along with the adjustment to its weekly figures, the EIA raised U.S. production forecasts for this year and next. The agency now expects domestic crude oil production to average 13.82 million bpd in the fourth quarter, up 1.1% from October’s forecast.

The new estimate implies that often written off U.S. production growth in 2025 was even higher than last year’s, expanding by an average of 2.7% year-on-year, compared to 2.2%.

Despite these adjustments, EIA continued to stay firm on their forecast that U.S. production will peak this year before gradually easing.

While an oil-price driven model would support this view as futures prices have softened more than 25% so far this year – with WTI inching closer to some producer’s break-evens – efficiency gains may continue to drive U.S. crude output to new highs, even with the number of active rigs waning.

BTS: Sept. N. American Freight DN 6.2% on Year to $127.8B

The value of North American transborder freight fell by 6.2% year-on-year in September to an estimated $127.8 billion, the Bureau of Transportation Statistics (BTS) at the U.S. Department of Transportation said Friday (11/14).

Goods moved between the United States and Mexico led the decline, slipping 9.7% in value to $65.5 billion while U.S.-Canada cargo slid 2.3% to $62.3 billion.

By mode of transport, trucks moved an estimated $80.3 billion of freight, marking a 9.2% decline from a year ago. Vessels transported $10.2 billion of freight, less 0.5%. Railways were down 2.2% to $16.7 billion, and pipelines fell 15.2% to $9.8 billion. The only category to show growth was air freight, which moved an estimated $4.6 billion of goods, registering a 0.14% increase year-over-year.

In terms of truck-borne freight, Laredo, El Paso, and Otay Mesa were the top gateways for U.S. freight flows with Mexico, while Detroit, Port Huron, and Buffalo led for Canadian-bound truck freight.

In rail freight, Laredo, Eagle Pass, and El Paso were the top rail connection points with Mexico. For Canada, the main rail links were Detroit, Port Huron, and International Falls.

For energy flows with Canada, the top pipeline regions were Chicago, Port Huron, and Minneapolis. The primary pipeline connections with Mexico were El Paso, Hidalgo, and Laredo.

For water-borne cargo, the busiest southern water port connections for energy flows were the Port of Houston, Arthur, and Texas City, while the top northern ports were the Port of Boston and Portland.

Analysis: Cracks Soar as Crude and Product Prices Diverge

Crude oil prices have softened throughout the year amid record high non-OPEC production and OPEC ramping up output since April. Since January 15, when WTI closed at its highest so far this year at $80.04 bbl, front-month WTI futures have fallen by more than 26%. Oil product prices, on the other hand, have held up much better. Front-month RBOB futures were down 9% in that same time span, and ULSD futures softened by only 5.6%.

Refining margins have consequently risen sharply this year, with the 3:2:1 crack spread vs. WTI climbing to its highest since March 2024. In the same time span in which crude oil futures lost more than a quarter in value, the 3:2:1 crack spread vs. WTI rose from $17 bbl to $30.69 bbl, an 80.5% increase. Tight product inventories, particularly of middle distillates, unplanned refinery outages and attacks on Russian downstream infrastructure boosted U.S., European and Asian refinery margins, with the latter two reaching two-year highs in October.

Under normal market conditions, crack spreads tend to move in unison with crude oil prices, as product prices are heavily influenced by oil prices. In the last ten months, however, they have been increasingly diverging, driven by strength in middle distillates and heavier products, as well as by rapidly growing crude oil supply.

The absence of Russian diesel was felt in Asian and European middle distillate inventories, which remained tight by historical standards. In the U.S., a cold winter in the Northeast and higher shipping demand ahead of large-scale tariff implementation drove middle distillate demand higher and kept inventories low.

At the same time, global crude oil production growth dwarfed the growth in refinery runs. The International Energy Agency in its latest monthly oil market report pegged global production in October at 6.2 million bpd higher than in January. A substantial portion of the additional supply, however, landed in inventories amid low refinery runs and China’s ballooning strategic crude oil reserves. Global runs grew by less than 1 million bpd year-on-year.

The crude-product divergence escalated in the third quarter. Global refinery throughput slumped in October, down 2.9 million bpd year-on-year amid unusually high seasonal turnarounds and unplanned outages, while global crude supply fell 440,000 bpd year-on-year. Product prices have consequently increased sharply since mid-October. Front-month ULSD futures are up more than 18% from their trough on October 17, and RBOB futures rose more than 9%.

As the rise in crude oil prices was much less pronounced, crack spreads have surged in the last six weeks. The 3:2:1 crack spread vs. WTI jumped from $21.4 bbl in early October to over $31 bbl, driven by pronounced strength in U.S. middle distillate cracks, which have over the past four weeks increased by more than 40%.

Blackstone Greenlights $1.2B West Virginia 600Mw Gas Plant

Blackstone Energy Transition Partners announced Friday (11/14) it was moving ahead to build a $1.2 billion, 600-megawatt gas-fired power plant in West Virginia to meet surging power demand in the mid-Atlantic region.

The Wolf Summit Energy plant will provide power to the Old Dominion Electric Cooperative, which serves about 1.5 million customers across Virginia, Maryland and Delaware, Blackstone said in a news release.

It will be West Virgina’s first combined-cycle natural gas power plant, intended to help meet fast-growing electricity needs driven by data-center expansion and AI-related power consumption.

GE Vernova will supply a 7HA.02 turbine for the power generation. 

The plant was originally proposed in 2015 and shelved in 2021, before being revived by Blackstone, which secured a final investment decision last week to commence construction.

EIA reports 45 Bcf Injection into US NatGas Storage Last Wk

Energy Information Administration data released midmorning Friday (11/14) show a 45 billion cubic feet injection into U.S. natural gas storage to 3.96 trillion cubic feet in the week ended November 07.

Natural gas in U.S. storage is 0.2% lower than last year and 4.5% above the five-year average of 3.788 Tcf.

Regionally, EIA reports the East registered a 5 Bcf injection to 914 Bcf, 3% less than a year ago and 0.3% lower than the five-year average.

Natural gas in storage in the Midwest increased 12 Bcf week-on-week to 1117 Bcf, a 1.9% deficit compared to the same week a year ago and 1% higher than the five-year average.

Mountain region natural gas in storage increased 2 Bcf, down 0.3% year-on-year to 19.8% above the five-year average.

South Central storage rose 22 Bcf to 1318 Bcf, 2.8% more than in the same week last year and 6.5% above the five-year average.

Phillips 66 Reports Flaring at Wilmington Refinery

Phillips 66 reported on Wednesday (11/12) a flaring event at its 139,000 bpd Wilmington, California refinery that began at 9:27 a.m. PT, according to a filing with the South Coast Air Quality Management District.

The event was attributed to start-up/shut-down operations. The company estimated the flaring would continue until 12:00 a.m. PT on December 1, according to the filing.