I wonder how our independent refineries are doing? Independent U.S. refiners operated at near full capacity and margins tripled in the third quarter as they benefited from war-related supply disruptions. The gap between refined product prices and refining costs has narrowed in recent weeks, but refiners expect this to be a temporary improvement because high global freight rates are exacerbating deep discounts on heavy crude oil, putting pressure on oil prices relative to refined products. Part of the margin decline is indeed due to the news of the release of strategic reserves and the easing of sanctions on Russia, among other things, says Valero's chief operating officer, Gary Simmons, but he suggests supply pressures remain. "When you look at the data and look at the scope of actual supply, and the removal of sanctions is more just a change in trade flows, I think in the future we will see a recovery in the difference between product prices and refining costs," he says. Phillips 66 expects strong refining margins to continue for much of next year due to continued global supply shortages as well as higher freight rates, says senior vice president of marketing and trading Brian Mondel. Freight rates in the fourth quarter should be higher than in the third quarter because the market for large crude oil tankers is very tight and several product carriers are being used to transport crude oil, he said. At the same time, demand for gasoline in the US fell by about 2.5% and demand for diesel fell by about 1.5%, but not enough to balance the market, Mendel said. High global freight rates, along with increased supplies of Venezuelan crude to the US Gulf Coast market, are putting pressure on Canadian heavy and sour crude.

I wonder how our independent refineries are doing? Independent U.S. refiners operated at near full capacity and margins tripled in the third quarter as they benefited from war-related supply disruptions. The gap between refined product prices and refining costs has narrowed in recent weeks, but refiners expect this to be a temporary improvement because high global freight rates are exacerbating deep discounts on heavy crude oil, putting pressure on oil prices relative to refined products. Part of the margin decline is indeed due to the news of the release of strategic reserves and the easing of sanctions on Russia, among other things, says Valero's chief operating officer, Gary Simmons, but he suggests supply pressures remain. "When you look at the data and look at the scope of actual supply, and the removal of sanctions is more just a change in trade flows, I think in the future we will see a recovery in the difference between product prices and refining costs," he says. Phillips 66 expects strong refining margins to continue for much of next year due to continued global supply shortages as well as higher freight rates, says senior vice president of marketing and trading Brian Mondel. Freight rates in the fourth quarter should be higher than in the third quarter because the market for large crude oil tankers is very tight and several product carriers are being used to transport crude oil, he said. At the same time, demand for gasoline in the US fell by about 2.5% and demand for diesel fell by about 1.5%, but not enough to balance the market, Mendel said. High global freight rates, along with increased supplies of Venezuelan crude to the US Gulf Coast market, are putting pressure on Canadian heavy and sour crude.