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Over Production Of Gasoline Led To Pressured Margins

The excess gasoline supply coupled with sluggish demand has pressurized the margins of refiners, reports Reuters, noting that the margins of refiners for fuel in United States reduced to about $45.70 per barrel yesterday. This drop follows fourth weekly rise in the gasoline inventories of the Unite States, which are all heavy, leading to the all time rise of gasoline supply, to about 259.6 Mn barrels till January 18th. Over past few weeks, Energy Data Administration reported the gasoline inventory build reaching the combined figure of 26.6 Mn barrels. But, the US is not only the largest gasoline hub in which the inventories are increasing as the demand remains stagnant.

 According to report of Reuters, the inventories in Netherlands, Singapore and Japan are at highs every year, with annual increase of their combined number of 21 Mn barrels, as shown by the consultant FGE. The shale oil of the United States boom has produced mainly light crude, which is used to make gasoline; hence, the most upcoming surge in the production resulted in extra production of light fuel. But, the refiners of United States have increased their gasoline extraction levels as it increased the production of distillate fuel as well, because it gives them higher margins.

The worries about the worldwide economic slowdown continued despite the reports from Asian countries that their governments have started preparing for some stimulus measures. The Wall Street also seems unanimous by its assumption of slowdown during this stage called as “late cycle” that has been preceding the recession. While, the things are somewhat similar in Europe too. The reports of Reuters said that the margins of gasoline are dropping in Europe as well, by hitting 7 year fall of negative $3.80 per barrel during this week. The economy of Europe is also struggling with such after effects of 2008 crisis than that of other regions.

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Brad Holbrook

When it comes to numbers and share market, Brad Holbrook is the right person to contact. He has a done MBA in Finance and also bags an experience of 5+ years in the industry. In addition to, he also looks after the accounts at ZMR Industry Journal. It is obvious from all these facts that Brad looks after the Business department. In his free time Brad tells that he loves to spend time with his wife and wishes to go to Maldives on long vacation.

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