Crude oil refining margins in U.S. at lowest level in almost five years

Crude stocks at Cushing also grew by a significant 1.4 million barrels. The US Department of Energy will be publishing the official inventory data this afternoon. In view of the very low crack spreads - the 3-2-1 crack spread in the US calculated by Bloomberg is currently at its lowest level in nearly five years - there is less incentive for US refineries to process crude oil. 

"The low margins are the result of a growing oversupply of oil products as rising worldwide refinery capacities have been confronted with subdued demand - for which there are seasonal reasons in the case of gasoline but also economic reasons in the case of middle distillates", says Commerzbank. 

Despite these trends, we believe the downside potential for oil prices is limited and expect to see moderately rising prices in the coming weeks and months. After all, there are increasing signs that non-OPEC supply is already decreasing noticeably as a consequence of the low prices, which will result in the oversupply being reduced next year. This picture would be confirmed if today's inventory data were to reveal a further decline in U.S. crude oil production, added Commerzbank.