U.S. refineries running at near-record levels
EIA- For the week ending July 6, 2018, the four-week average of U.S. gross refinery inputs surpassed 18 million barrels per day (b/d) for the first time since the U.S. Energy Information Administration (EIA) began publishing that data series in 1990 (Figure 1). U.S. refineries are running at record levels in response to robust domestic and international demand for motor gasoline and distillate fuel oil.
Before the most recent increases in refinery runs, the last time the four-week average of U.S. gross refinery inputs approached 18 million b/d was the week of August 25, 2017. That week also marked the peak of U.S. gross refinery inputs for the year, and Hurricane Harvey made landfall the following week, which resulted in widespread refinery closures and shutdowns along the U.S. Gulf Coast. Although U.S. gross refinery inputs have fallen since the week ending July 6 to 17.7 million b/d for the week ending July 27, U.S. gross refinery inputs are still 759,000 b/d higher than the five-year (2013-2017) average level for this time of year.
Despite record-high inputs, refinery utilization as a percentage of capacity has not surpassed the record set in 1998. Rather than higher utilization, refinery runs have increased with increased refinery capacity. U.S. refinery capacity increased by 862,000 barrels per calendar day (b/cd) between January 1, 2011, and January 1, 2018.
The record-high U.S. input levels are driven in large part by refinery operations in the Gulf Coast and Midwest regions, the Petroleum Administration for Defense Districts (PADD) with the most refinery capacity in the country. The Gulf Coast (PADD 3) has more than half of all U.S. refinery capacity and reached a new record input level the same week as the record-high overall U.S. capacity, with four-week average gross refinery inputs of 9.5 million b/d for the week ending July 6. The Midwest (PADD 2) has the second-highest refinery capacity and the four-week average gross refinery inputs reached 4.1 million b/d for the week ending June 1.
U.S. refineries are responding to high demand for petroleum products, specifically motor gasoline and distillate. The four-week average of finished motor gasoline product supplied— EIA’s proxy measure of U.S. consumption—typically hits the highest level of the year in early August. Weekly data for this summer to date suggest that this year’s peak in finished motor gasoline product supplied is likely to match that of 2016 and 2017, the two highest-level years on record each at 9.8 million b/d, with the four-week average of finished motor gasoline product supplied for the week ending July 27, 2018, at 9.7 million b/d. Although the United States has typically been a net importer of gasoline in the spring and summer months, when domestic consumption increases, and a net exporter in winter months when demand is lower, recent strong international demand has pushed four-week average finished gasoline exports to 776,000 b/d for the week ending July 27, 2018, compared with 557,000 b/d at the same time last year.
U.S. distillate product supplied is also robust, averaging 3.9 million b/d for the past four weeks, 35,000 b/d higher than the five-year average level for this time of year. In addition to relatively strong domestic distillate consumption, U.S. exports of distillate have continued to increase, reaching a four-week average of 1.2 million b/d as of July 27, 2018. For the week ending July 27, 2018, the four-week average of U.S. distillate product supplied plus exports (a measure of total call on U.S. distillate supplies) reached 5.1 million b/d.
In its July update of the Short-Term Energy Outlook (STEO), EIA estimates that U.S. refinery runs will average 16.9 million b/d and 17.1 million b/d in 2018 and 2019, respectively. If achieved, both would be new record highs, surpassing the 2017 annual average of 16.6 million b/d.
U.S. average regular gasoline and diesel prices increase
The U.S. average regular gasoline retail price increased nearly 2 cents from last week to $2.85 per gallon on July 30, 2018, up 49 cents from the same time last year. Midwest prices rose nearly three cents to $2.77 per gallon, Gulf Coast prices increased two cents to $2.59 per gallon, and East Coast prices increased over a penny to $2.79 per gallon. Rocky Mountain prices decreased two cents to $2.91 per gallon, and West Coast prices dropped one cent to $3.35 per gallon.
The U.S. average diesel fuel price increased nearly a cent from last week to $3.23 per gallon on July 30, 2018, 70 cents higher than a year ago. Midwest prices rose over one penny to $3.16 per gallon, East Coast prices rose nearly one cent but remained at $3.22 per gallon, Gulf Coast prices increased less than one cent to $3.00 per gallon, and West Coast prices rose slightly, remaining virtually unchanged at $3.72 per gallon. Rocky Mountain prices decreased by nearly one cent to $3.36 per gallon.
Propane/propylene inventories rise
U.S. propane/propylene stocks increased by 1.8 million barrels last week to 66.3 million barrels as of July 27, 2018, 8.8 million barrels (11.7%) lower than the five-year (2013-2017) average inventory level for this same time of year. Midwest inventories increased by 1.5 million barrels, and Rocky Mountain/West Coast and Gulf Coast inventories each increased by 0.2 million barrels, while East Coast inventories decreased by 0.1 million barrels. Propylene non-fuel-use inventories represented 4.2% of total propane/propylene inventories.
Comments