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German Oil Refiner Observes “Run” On Diesel & Heating Oil, Halts Deliveries
German Oil Refiner Observes “Run” On Diesel & Heating Oil, Halts Deliveries
The latest sign Europe’s energy problems are worsening is that Austrian oil and gas firm OMV AG halted crude product deliveries from storage facilities in Germany amid a “run” on supplies, Bloomberg reported.
OMV Germany said two storage facilities in the southern part of the country “are observing a current run on heating oil and … this is possibly due to crisis-driven market shortages and thus excessive speculation and stockpiling.”
“In order to secure supplies in the short and medium term, loading will now be temporarily suspended until the Burghausen refinery has resumed production,” OMV said in an emailed response, adding Burghausen and Feldkirchen’s storage facilities will restart deliveries on Aug. 15.
A combination of issues has led to diesel and heating oil in southern Germany, Austria, and Switzerland.
- First is the energy disruption due to Western sanctions on Russia.
- Second OMV’s Burghausen refinery maintenance.
- And third, falling water levels on the Rhine River have reduced deliveries of crude product shipments from the North Sea.
The panic hoarding of diesel and heating fuel likely comes from utilities who have had to switch the type of power generation from natural gas to other crude products due to capacity constraints on the Nord Stream 1.
German power prices have soared to a new record of more than 400 euros per megawatt-hour on the European Energy Exchange on Thursday on the prospects of a worsening energy crisis.
With Brent crude prices tumbling below $100 a barrel, it appears the paper oil market is out of touch with the tightness reality of physical markets.
US Heating Oil Supplies Lowest In Decades Ahead Of Winter
US Heating Oil Supplies Lowest In Decades Ahead Of Winter
Americans are hoping the energy crisis in Asia and Europe won’t spread stateside. But industry insiders warn that winter blackouts across the US are possible as low fossil fuel stockpiles may lead to shortages amid heightened demand.
The latest concern is ultra-low stockpiles of heating oil (distillate fuel oil). In the winter of 2019–2020, about 5.5 million households used heating oil as their primary heating source, and 81% of those households were in the Northeast.
Energy Information Administration (EIA) reports there are only 31.2 days of the demand for heating oil, the lowest levels since 2000.
Low stockpiles ahead of cooler weather could be problematic for consumers who may be burdened with high energy costs, or worse, fuel shortages. Below is the two-week forecast for the US Lower 48, underlining cooler weather trends are nearing and how consumers shouldn’t wait until the last minute to fill up their tanks.
Suzanne Danforth, an analyst at Wood Mackenzie Ltd., told Bloomberg low stockpiles of heating oil won’t be as severe as the gas crisis in Europe where prices went parabolic, though she warned: “It’s going to be tight, very tight.”
One of the reasons behind low supplies is due in part to the deep freeze in Texas earlier this year that paralyzed refiners and knocked out as much as 5.5 million barrels a day of processing capacity, causing a tremendous drawdown of diesel inventories.
Inventories continued tightening through the year as a surge in truck drivers was seen to transport goods across the country. There’s also been a rise in jet fuel demand as travel rebounded, and let’s not forget farmers’ increasing diesel demand during harvest. The timing of refiners shutting down for maintenance could amplify the tightness.
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