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High Diesel Demand Could Cause An Oil Price Spike

Diesel

Friday September 29, 2016

In the latest edition of the Numbers Report, we’ll take a look at some of the most interesting figures put out this week in the energy sector. Each week we’ll dig into some data and provide a bit of explanation on what drives the numbers.

Let’s take a look.

1. More light oil, less heavy oil

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- The uptick in oil production since March 2017 has come largely from lighter forms of oil, more than offsetting declines in medium and heavier oils, according to the EIA.
- This is the result of a rise in shale production at a time when OPEC is cutting back. But outages and declines in Mexico, Canada and Venezuela have also taken heavier barrels off of the market, while production increases in Libya and Nigeria have added new lighter barrels to global supply.
- Lighter oil typically trades at a premium to heavier oil, but the increase in supply of lighter oil and the cutbacks in heavier oil have led to a narrowing of the price spreads between them.
- The premium for Louisiana Light Sweet (LLS) over heavy Maya has declined significantly from $9 per barrel in March to just $5 per barrel in August. Similarly, WTI’s $13 premium to Western Canadian Select has narrowed to $10 per barrel over the same timeframe.

2. EVs beat oil-fueled cars on maintenance

(Click to enlarge)

- Electric cars continue to gain ground on incumbent technologies (gasoline and diesel…




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