Oil Costs & Refinery Margins Fell Barely in 1st Quarter of 2025

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In the course of the first quarter of 2025 (1Q25), crude oil costs typically decreased whereas U.S. refinery margins initially elevated earlier than lowering within the remaining month of the quarter. On this quarterly replace, we evaluate petroleum markets worth developments in 1Q25, masking crude oil costs, refinery margins, biofuel compliance credit score costs, and pure fuel plant liquids costs.

Crude oil costs

After reaching a quarterly excessive of $82 per barrel (b) on January 15, crude oil costs typically declined by means of the top of the primary quarter, settling at $75/b on March 31. Though our preliminary world petroleum provide and demand estimates recommend international consumption outpaced manufacturing—which usually places upward strain on costs—oil costs largely fell following considerations surrounding future financial progress.

In response to the U.S. Bureau of Financial Evaluation, U.S. GDP declined 0.3% in 1Q25. This marks the primary financial contraction since 1Q22. Financial progress considerations weigh on oil costs as a result of a decline in financial exercise reduces demand for oil.

Refinery margins

U.S. refinery utilization began 2025 at 93% however fell under 90% starting in mid-January, ending the quarter at 86%. Midwest utilization was significantly excessive, remaining above 90% by means of all however the final week of the quarter. West Coast utilization fell from 80% to 90% in January and February to under 75% in late March, partly on account of an outage at PBF Vitality’s Torrance refinery in addition to a main outage on the firm’s Martinez refinery, each in California. East Coast utilization began the 12 months at 83% however decreased under 60% in late February and thru March, ending the quarter at 59%. This displays regular spring upkeep and a serious turnaround at Phillips 66’s Bayway refinery in Linden, New Jersey. After present process seasonal upkeep, Gulf Coast utilization started growing in March going into the second quarter as refiners put together for the summer season demand season.

In February, refinery crack spreads—a proxy for refining margins—for gasoline had been about 35 cents per gallon (cpg) at New York Harbor, about 8 cents above the 2020–24 common. Los Angeles crack spreads had been about 70 cpg in February, about 9 cents increased than common. In March, crack spreads fell to 23 cpg at New York Harbor and 61 cpg at Los Angeles, each under their five-year averages for the month. Crack spreads for distillate gasoline oil, which had been under common by means of most of 2024, elevated this winter. This enhance is partially supported by heating oil consumption in response to chilly climate.

Biofuel compliance credit score costs

The costs for biomass-based diesel (D4) and ethanol (D6) renewable identification quantity (RIN) credit—the compliance mechanism used for the Renewable Gas Customary (RFS) program administered by the U.S. Environmental Safety Company (EPA)—have been increased in 1Q25 than in 2024 due to increased feedstock costs and fewer manufacturing of biodiesel and renewable diesel—the 2 fuels that generate most D4 RINs. RIN costs peaked in late February and once more in late March, once they had been increased than at any time since 2023.

In 1Q25, D4 RINs traded at a slight premium to D6 RINs due to low biomass-based diesel manufacturing. We estimate that the mixed home manufacturing of biodiesel and renewable diesel for January 2025 decreased by about 30% from the earlier month to about 230,000 barrels per day, the least since December 2022.

Pure fuel plant liquids

The pure fuel plant liquids (NGPL) composite worth at Mont Belvieu, Texas, rose 10% in 1Q25 in contrast with the earlier quarter to a mean of $8.10 per million British thermal models, pushed by positive aspects in ethane and propane costs.

Most NGPL costs comply with crude oil costs, apart from ethane, which is linked to pure fuel costs. Ethane costs climbed 4% from January 1 to March 31, following a pointy rise within the Henry Hub pure fuel worth (21%). Propane costs elevated 7% due to robust heating demand this winter, particularly in January. Regular butane and isobutane costs decreased about 20% over the quarter, dropping at a sooner fee than West Texas Intermediate crude oil costs. Pure gasoline costs fell 1% all through 1Q25 and have been at a premium to crude oil costs on a heat-value foundation.

First revealed on Right this moment in Vitality. Principal contributor: Petroleum and Liquid Fuels Markets Staff.