Thank you for a wonderful week and best wishes to you and your family from here in the 9th Floor.
As the summer weather sets in, as much as it pains me to do so, I simply must insist you spend a little less time here. Check in once a day, but no more. You are excused to spend all day loitering about my office in rain showers.
Life is short friends, so free yourself to enjoy it.
I made just one move this week, buying ALDW. I have also identified a position which I may short, either directly or synthetically. I’ll decide next week what I want to do.
The next issue of the IIR will be out this weekend. Make sure those of you who are paying members check in to collect your issue. You can reach me either on my wall or at [email protected].
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Cain, I hope you and your family had a Happy Easter as well.
Could you please explain how a widening spread between WTI and Crude increases profits for refiners? Thank you very much for the knowledge.
For a refiner, the linear combination of effects that is base cost includes the cost per barrel of oil. The linear combination is also things like labor cost, energy, catalysts, equipment,…etc.
WTI is US market, whereas European markets are Brent. Low WTI, US refineries have a cost spread advantage. Does it hold up under export scenarios? Get passed along to manufacturing? Get passed along in the export process?
The general theory is that the refiner keeps the spread, but can use the difference to send refined goods to foreign shores at their prices, keeping the difference for themselves. That’s all.