“Gratitude is not only the greatest of virtues but the parent of all others.”
– Marcus Tillius Cicero
Jobs Update
- Initial jobless claims for the week ending May 21st, 2022 came in at 210,000, down 8,000 people week-over-week.
- Continuing claims came in at 1.346 million people, versus the adjusted number of 1.315 million people from the week prior, up 31,000 people week-over-week.
Stocks closed higher on Friday of last week and up week-over-week
The DOW closed higher on Friday of last week, up +575.77 points (+1.76%), closing out the week at 33,212.96 points, up 1,951.06 points week-over-week. The S&P 500 closed higher on Friday of last week, up 100.4 points, (+2.47%), and closed out the week at 4,158.24, up 256.88 points week-over-week. The Nasdaq closed higher on Friday of last week, up 390.48 points (3.33%), and closed out the week at 12,131.13, up 776.51 points week-over-week.
In overnight trading, DOW futures traded higher and are expected to open at 33,036 this morning down -122 points.
Oil closed higher on Friday of last week and higher week over week
Oil prices rose on Friday, closing out the week with gains ahead of the U.S. Memorial Day holiday weekend, the start of peak U.S. demand season (driving season), and as European nations negotiate over whether to impose an outright ban on Russian crude oil.
U.S. West Texas Intermediate (WTI) crude closed up $0.98 per barrel (+0.86%) on Friday of last week, to settle at $115.07 up $4.79 per barrel week over week. Brent crude rose $2.03 per barrel, or 1.7%, to settle at US$119.43 on Friday of last week. For the week, Brent rose 6% while WTI gained 1.5%.
U.S. commercial crude oil inventories (excluding those in the Strategic Petroleum Reserve) decreased by 1.0 million barrels week over week. At 419.8 million barrels, U.S. crude oil inventories are 14% below the five-year average for this time of year.
Total motor gasoline inventories decreased by 500,000 barrels week over week and are 8% below the five-year average for this time of year.
Distillate fuel inventories increased by 1.7 million barrels week over week and are 21% below the five-year average for this time of year
Propane/propylene inventories increased by 1.8 million barrels week over week and are 8% below the five-year average for this time of year.
Propane prices were flat week over week at $1.22 per gallon.
Overall, total commercial petroleum inventories increased by 700,000 barrels week over week.
U.S. crude oil imports averaged 6.5 million barrels per day during the week ending May 20th, 2022, down by 82,000 barrels per day from the previous week. Over the past four weeks, crude oil imports averaged 6.4 million barrels per day, 8.6% more than the same four-week period last year. Total motor gasoline imports (including both finished gasoline and gasoline blending components) averaged 847,000 barrels per day, and distillate fuel imports averaged 80,000 barrels per day for the week ended May 20th, 2022.
U.S. crude oil refinery inputs averaged 16.3 million barrels per day during the week ending May 20, 2022, up 334,000 barrels per day week over week.
As of the writing of this report, WTI is poised to open at $118.60, up $3.53 per barrel from Friday’s close.
North American Rail Traffic
Total North American rail volumes were down 2.9% year over year in week 20 (U.S. -4.1%, Canada -0.2%, Mexico +3.7%) resulting in the quarter to date volumes that are down 3.9% year over year and year to date volumes that are down 3.8% year over year (U.S. -3.6%, Canada -6.4%, Mexico +3.2%). 6 of the AAR’s 11 major traffic categories posted year-over-year declines with the largest decreases coming from intermodal (-3.0%) and grain (-15.2%). The largest increase came from petroleum (+5.6%).
In the East, CSX’s total volumes were down 0.6%, with the largest decreases coming from coal (-4.4%) and nonmetallic minerals (-18.7%). The largest increase came from intermodal (+3.6%). NS’s total volumes were down 3.2%, with the largest decreases coming from intermodal (-2.5%) and coal (-9.2%).
In the West, BN’s total volumes were down 3.3%, with the largest decreases coming from intermodal (-4.7%) and grain (-9.0%). The largest increase came from coal (+2.2%). UP’s total volumes were down 1.8%, with the largest decreases coming from intermodal (-6.4%) and grain (-11.0%). The largest increase came from coal (+15.1%).
In Canada, CN’s total volumes were up 0.8%, with the largest increases coming from petroleum (+39.3%) and coal (+20.2%). The largest decreases came from intermodal (-4.2%) and chemicals (-11.4%). Revenue per ton-miles was up 5.8%. CP’s total volumes were down 3.8%, with the largest decreases coming from coal (-30.0%) and farm products (-70.9%). The largest increase came from intermodal (+13.9%). Revenue per ton-miles was down 3.1%.
KCS’s total volumes were down 0.5%, with the largest decrease coming from petroleum (-29.3%). The largest increase came from intermodal (+7.7%).
Source: Stephens
Rig Count
North American rig count was up 14 rigs week over week. U.S. rig count was down by 1 rig week-over-week and up by 270 rigs year over year. The U.S. currently has 727 active rigs. Canada’s rig count was up by 15 rigs week-over-week and up by 41 rigs year-over-year. Canada’s overall rig count is 103 active rigs. Overall, year over year, we are up 311 rigs collectively.
North American Rig Count Summary
A few things we are keeping an eye on:
Petroleum Carloads
The four-week rolling average of petroleum carloads carried on the six largest North American railroads rose to 23,618 from 23,413, which is a gain of 205 rail cars week-over-week. Canadian volumes were higher: CN’s shipments were up by 13.6% and CP volumes were up by 0.3% U.S. volumes were up across the board with the BN having the largest percentage increase (up by 11.1%).
Crude by Rail Out of Canada
The Canadian Energy Regulator (“CER”) updated its monthly crude by rail numbers on May 20th. For March 2022, Canada exported 151,894 barrels per day by rail, up 27,113 barrels per day month over month, its highest level since September of 2021 but still a far cry from its peak of 411,991 barrels per day in February 2020. We are a step in the right direction, however, Enbridge is still accepting all nominations on their network and inventory levels in Alberta are still low. Crude by rail out of Alberta has been popular of late for raw Bitumen (no diluent added) as it can be shipped as a non-hazmat product resulting in lower shipping costs that are competitive with pipelines. Crude by rail is also popular for off-spec products that can be blended here in the United States and in areas where there is no pipeline access. Before crude by rail out of Canada can come back in a meaningful way, supply needs to exceed pipeline capacity widening basis. Should be interesting to how we sit going into Q3 as most major plant turnarounds in Alberta will be complete.
Troubles in Mexico
As mentioned above, KCS’s petroleum shipments are down 29.3% yet Mexico is running short on diesel and gasoline. What is the issue? The Mexican government canceled permits for the importation of gasoline and diesel for many importers who were importing gasoline and diesel from the United States. That volume was being transported by rail into Mexico. The result is it pushed a bunch of railcars back into the U.S. forcing companies transporting the fuel in rail cars to head for rail car storage here in the U.S. or trying to seek sublease opportunities. Why did they do this? The Mexican government wants Pemex to be the producer, refiner and importer of all petroleum products. By having Pemex control the value chain the state-owned company has been more easily able to integrate government fuel price discounts to its citizens into its price. Pemex has turned to importing more and more gasoline and diesel cargoes but that has led to significant congestion at Mexican Ports. At least 15 medium-range clean tankers are waiting to unload outside of the Port of Tuxpan and 14 outside of the port of Pajaritos, a situation that does not look like it is going to improve anytime soon. Maybe rail for refined products will come back soon? It seems to us that if Pemex wants to control the value chain as directed by the current government directive, maybe they should give rail a shot. There are certainly plenty of cars out there ready to go into that service – just a thought.
Why are Gas Prices So High
Folks, I don’t know about you but we are getting pretty tired of hearing about why gas prices are so high. The fact of the matter is it is intentional that prices are this high and a result of terrible government policy in the attempt to transform the United States into a green energy economy that is really not so green when you drill into the facts. How can we call Solar green when it takes conventional energy to make solar panels and we have to mine rare earth minerals to find the components to make the panels on top of it, how do we handle the waste once the panels reach their useful life? We are not saying solar is bad, there is a need for it and it can be part of the energy mix – you can say the same for wind. Let’s not call it green. Who are we fooling? Let’s take a look at what we are reading about day after day:
· One pundit will blame it on the war in the Ukraine. Folks, prices were going up before the war and India and China are buying as much Russian crude as they can and at these prices the Russian’s will continue to sell and someone will buy – Russian crude will still be part of the supply mix – someone is going to buy it. Just because Europe and the U.S. won’t over the long term it should not have any impact as it relates to the demand/supply mix, everything has a way of balancing itself out.
· Another pundit will blame the producer for not drilling and keep up with demand, that they are greedy. Yet at the same time, the government is punishing those producers behind the scenes that want to do so. Either by virtue of canceling leases and increasing regulatory control over drilling permits, increased taxes for the process of having a well drilling, or making too many regulatory hurdles that are punitive in certain circumstances discouraging development.
· Some blame the refineries for not processing enough gasoline, but government programs that punish refineries that cannot blend ethanol and biodiesel are forced to buy RINS causing their compliance costs to soar. If you are a refinery in California you have to buy LCFS credits on top of RINS adding to your compliance cost woes if you are a refinery. Owning a refinery until recently has not been very attractive.
· Then of course you have our favorite – canceling pipelines that provide for the safe transportation of crude. Keystone could be delivering almost 1 million barrels a day of crude oil from Canada to the United States right now if not canceled by the Biden administration on day one in office. Biden then wouldn’t need to sell any crude from the SPR if he did not do such a thing. It is just not Keystone – existing pipelines across the country are under attack.
The bottom line is, if you want to know why prices are so high you only need to look at the current administration and no further it is that simple and ask them when they are going to change their punitive policies.
We have been extremely busy at PFL with return on lease programs involving rail car storage instead of returning cars to a shop. A quick turnaround is what we all want and need. Railcar storage in general has been extremely active. Please call PFL now at 239-390-2885 if you are looking for rail car storage, want to troubleshoot a return on lease scenario, or have storage availability. Whether you are a car owner, lessor or lessee, or even a class 1 that wants to help out a customer we are here to “help you help your customer!”
Leasing and Subleasing has been brisk as economic activity picks up. Inquiries have continued to be brisk and strong Call PFL Today for all your rail car needs 239-390-2885
PFL is seeking:
- 5, 29k Tank Cars needed in Texas off of the KCS for 5 years. Need to be lined.
- Up to 40 5500 Covered Gons 286 unlined CSX/NS preferred but will consider other
- 30 boxcars on UP or CP for 3 years to run from TX to Edmonton – negotiable
- 6-10 Open top 4200 gons for hauling scrap NS in Ohio for 1-3 years
- 100, 2480 CU-FT Ag Gons needed in Texas off of the UP for 1-3 Years.
- 50, 30K+ Tank cars are needed in several locations. Can take in various locations off various Class 1’s. Can have prior Ethanol heel or Gasoline heel.
- 300 5800 Covered hoppers needed for plastic – 5-year lease – negotiable
- 50 29K C&I Tanks for veg oil to purchase – Immediate need
- 15 5200-5500 PD hoppers in the west UP for 5 years for soda ash negotiable
- 30 5800 and 6250 covered gons for sale
- 50, 5800cuft or larger Covered Hopper for use in DDG needed in the Midwest for 3-4 years. Immediate need.
- 10-20 Covered hopper grain cars in the midwest 5200-5500 2-3 years
- 20-30, 19K Tank Cars for Caustic Soda needed in Texas off of the UP or BN.
- 100 Moulton Sulfur cars for purchase – any location – negotiable
- 12 Plate F 286 GRL Boxcars 12’ plug doors midwest preferred for a 1-year lease
- 30-50 Log Flats with stanchions 286K GRL in the midwest/east CSX NS 1-3 years negotiable
- 50 Ag Gons 2500-2800cuft 286k GRL in the east CSX for 5 years negotiable
- 25 Covered wood chip Gons 6000 CF 286 GRL any location for 1-3 years negotiable
- 25 Boxcars for paper 6000CF 286 GRL 1-3 years anywhere
- 100 15K Tanks 286 for Molten Sulfur in the Northeast CSX/NS for 6 months negotiable
- 100, 5800 Covered Hoppers 286 can be West or East for Plastic 3-5 years
- 70, 117R or J needed for Ethanol for 3 years. Can take in the South.
- 50, 6500+ cu-ft Mill Gon or Open Top Hopper for wood chips in the Southeast for 5 Years.
- 25 bulkhead flats 286 any class one for up to 5 years Negotiable
- 20, 19,000 Gal Stainless cars in Louisiana UP for nitric acid 1-3 years – Oct negotiable
- 10, 6,300CF or greater covered hoppers are needed in the Midwest.
- 2, 89’ Flatcars for purchase or lease – needed in TX off the BNSF
PFL is offering:
- Various tank cars for lease with dirty to dirty service including, nitric acid, gasoline, diesel, crude oil, Lease terms negotiable, clean service also available in various tanks and locations including Rs 111s, and Js – Selection is Dwindling. Call Today!
- 200 Clean C/I 25.5K 117J in Texas. Brand New Cars!
- 150 25.5 111’s in the Midwest for sale – Negotiable
- Up to 150 sand cars for sale at various locations and class ones – Great Price!
- 150 117R’s 31.8 clean for lease in Texas KCS – negotiable
- 31.8K Tank Cars last in Diesel. Dirty to dirty in Texas
- 200 117Js 29K OK and TX Clean and brand new – Lined- lease negotiable
- 100 117Rs dirty last in Gasoline in Texas for lease Negotiable
- 90 117Rs 30K located in Alberta CN or CP Refined Products Dirty – negotiable
- 99 340W Pressure Cars various locations Butane and Propane dirty negotiable
- 100 29K C/I 1232 cars for lease. Dirty in Heavy Crude and can be returned dirty.
- 50 29K 117Js in Nebraska for sale or lease clean last in crude
- 100 117Rs 29K clean last used in crude Washington State – price negotiable sale or lease
- 100 111s of various volumes and locations last in fuel oil dirty price negotiable
- Various Hoppers for lease 3000-6250 CF 263 and 268 multiple locations negotiable
- 100 3200 Covered Hoppers for sale price negotiable
Call PFL today to discuss your needs and our availability and market reach. Whether you are looking to lease cars, lease out cars, buy cars or sell cars call PFL today at 239-390-2885
PFL offers turn-key solutions to maximize your profitability. Our goal is to provide a win/win scenario for all and we can handle virtually all of your railcar needs. Whether it’s loaded storage, empty storage, subleasing or leasing excess cars, filling orders for cars wanted, mobile railcar cleaning, blasting, mobile railcar repair, or scrapping at strategic partner sites, PFL will do its best to assist you. PFL also assists fleets and lessors with leases and sales and offers Total Fleet Evaluation Services. We will analyze your current leases, storage, and company objectives to draw up a plan of action. We will save Lessor and Lessee the headache and aggravation of navigating through this rapidly changing landscape.
PFL IS READY TO CLEAN CARS TODAY ON A MOBILE BASIS WE ARE CURRENTLY IN EAST TEXAS
Live Railcar Markets
| CAT | Type | Capacity | GRL | QTY | LOC | Class | Prev. Use | Clean | Offer | Note |
|---|