During the first quarter of 2025, crude oil prices saw a notable decline, while U.S. refinery margins experienced an initial increase followed by a decrease toward the quarter’s end. This update examines the key developments in petroleum markets, including crude oil prices, refinery margins, biofuel compliance credit prices, and natural gas plant liquids (NGPL) prices.
Crude oil prices peaked at $82 per barrel on January 15 before generally falling, finishing the quarter at $75 per barrel on March 31. Preliminary estimates indicate that global consumption outpaced production, which typically exerts upward pressure on prices.
However, concerns regarding future economic growth led to the decline in oil prices. The U.S. Bureau of Economic Analysis reported a 0.3% contraction in GDP during 1Q25, marking the first economic downturn since early 2022, which negatively impacted oil demand.
U.S. refinery utilization began the year at 93% but dropped below 90% by mid-January, concluding the quarter at 86%. Utilization rates varied significantly by region.
The Midwest maintained utilization above 90% for most of the quarter, while the West Coast experienced a decline due to refinery outages. The East Coast faced a significant drop in utilization as routine maintenance took place, ending the quarter at 59%.
The Gulf Coast’s utilization increased in March as refiners geared up for the summer demand surge. In February, refinery crack spreads for gasoline at New York Harbor averaged around 35 cents per gallon, which was slightly above the five-year average.
However, by March, these crack spreads fell below average, indicating a tightening margin environment. Similarly, distillate fuel oil crack spreads saw a winter increase due to higher heating oil demand.
The prices for biomass-based diesel and ethanol renewable identification number (RIN) credits rose in 1Q25 compared to 2024 due to increased feedstock costs and reduced biodiesel production. D4 RINs traded at a premium to D6 RINs during this quarter, with domestic biodiesel and renewable diesel production experiencing a sharp drop of approximately 30% in January.
On the natural gas plant liquids front, the average composite price at Mont Belvieu, Texas, rose by 10% in 1Q25, largely attributed to increased ethane and propane values. Ethane prices increased in tandem with a rise in natural gas prices, while propane prices experienced upward pressure due to strong winter heating demand.
Overall, the quarter reflected significant variability in the energy markets, influenced by economic conditions and operational trends in refining and production.