NYMEX crack spreads keep on rallying Thursday, but how much of that is really product strength, and how much the depressed front of the WTI curve? May/June WTI traded out to below -$2.20/barrel, and the monthly index rolls are yet to start. Wait till next week, when the curve should get hammered some more.
The great crack spreads are great for refiners, but looking at the crudes these refiners are actually running makes the spreads look not quite so good.
The Gulf Coast cracking yield on LLS was $85.08/barrel Thursday, according to Platts and Turner Mason data, $2.01 higher than WTI. The yield is calculated from the spot prices of the products created when the particular crude is refined.
But the spot price for LLS was $7.00/barrel above WTI (71.33/b vs. 64.33/b), making it about $5/barrel less profitable to refine, at $13.75/b margin. Another example, Mars -- a heavy, sour barrel -- showed a coking yield of $76.78/barrel, and a spot price of $63.28/barrel, for $13.50/b margin.
Isn't this an arguement that WTI has become a meaningless indicator for anything refinery related? I mean the USGC has just about all the incremental refining capacity in the US, and runs not one single solitary drop of WTI. Isn't Maya or Mars a better indicator of spot refinery economics.
Certainly for Gulf Coast refiners WTI has limited use. But it's still the benchmark, so until other crudes are priced against something other than WTI, it still has relevance.