Refining capacity near 3-year high

Sam Fletcher
OGJ Senior Writer

US refineries were operating at 91.5% of capacity in the week ended July 16—“the highest level since August 2007” and up from 90.5% the previous week, said Jacques H. Rousseau, an analyst at RBC Capital Markets under the Royal Bank of Canada.

The input of crude into US refineries increased only 48,000 b/d to 15.5 million b/d that same week (the latest period available at presstime). “But production of light products (gasoline plus distillate plus jet fuel) decreased approximately 0.5%,” said Rousseau. EIA said US gasoline production declined to 9.3 million b/d; distillate fuel production increased to 4.5 million b/d. “Finished product imports increased about 105,000 b/d week to week,” Rousseau said.

“Demand improved slightly week-over-week but remains well below historical summer levels,” he said. In the 4 weeks through July 16, demand for light products was 3% ahead of year-ago levels, compared with an increase of 4.6% the prior week. Rousseau said, “Gasoline consumption increased by about 350,000 b/d week-over-week, but distillate demand declined.”

US gasoline deliveries for this year’s first half averaged 8.88 million b/d, down 0.6 % from the same period a year ago as a result of a sluggish economic recovery, said the American Petroleum Institute in its Monthly Statistical Report for June. Gasoline deliveries of 9.18 million b/d were the lowest for any June since 2004 and 0.5% lower than June 2009 deliveries, it said.

“The listless economic recovery continues to take a bite out of gasoline demand,” observed API Chief Economist John Felmy. “It’s clear from the gasoline deliveries data that consumer confidence in the economy remains shaky. This certainly supports API’s position that increased taxes or other anti-jobs policies by Congress or the administration could increase unemployment and harm our economic recovery.”

Although gasoline demand remained depressed, distillate demand—which tends to track economic output closely—improved in both the first half of the year and for June, API said. First-half low-sulfur distillate deliveries jumped 2.1% from 2009 to average 3.29 million b/d in 2010; June low-sulfur distillate deliveries surged 12.3% from last year to average 3.51 million b/d in June 2010.

US inventories
The Energy Information Administration reported commercial US crude inventories increased 400,000 bbl to 353.5 million bbl in the week ended July 16, counter to Wall Street’s consensus for a drop of 1.2 million bbl. Gasoline stocks climbed 1.1 million bbl to 222.2 million bbl in that same week, exceeding traders’ expectations of a 700,000 bbl increase. Distillate fuel inventories jumped by 3.9 million bbl to 166.6 million bbl, surpassing market forecasts for a 1.5 million bbl build.

Gasoline inventories were 5% ahead of their 5-year average that week while distillate stocks are 25% ahead of their 5-year mean, Rousseau said.

The API earlier reported a 241,000 bbl decline in crude stocks to 353.3 million bbl, with gasoline inventories down 412,000 bbl to 221.4 million bbl, and distillate fuel stocks registering the only increase, up 979,000 bbl to 161.9 million bbl.

Imports of crude into the US increased by 696,000 b/d to 10 million b/d, EIA said. Over the 4 weeks through July 16, US crude imports averaged 9.5 million b/d, up by 203,000 b/d from the comparable 4-week period in 2009.

Rousseau reported, “After a high level of refinery maintenance in the spring, improved margins have begun to attract increased refinery production and additional imports this summer, and coupled with above-average inventory levels, we anticipate declining refining margins in July and August, a negative for refining stocks.”

He said the average US refining margin decreased to $9.70/bbl from $10.65/bbl during the week vs. average margins of $12/bbl in 2008 and $9/bbl in 2009. The price differential between the US benchmark sweet, light West Texas Intermediate and Mexico’s heavy, sour, Maya crude averaged $9/bbl in that week, in-line with the 2010 average through that date, compared with average spreads of $5/bbl in 2009 and $16/bbl in 2008.

The surprising EIA report triggered a drop in crude and petroleum product prices July 21 on the New York market, ending a 2-day rally. “The slide in prices accelerated after Federal Reserve Chairman Ben Bernanke called the economic outlook ‘unusually uncertain.’ The equity markets plunged after Bernanke’s remarks,” said Anuj Sharma, research analyst at Pritchard Capital Partners LLC in Houston. However, he said, “Concerns of supply disruption in the Gulf of Mexico due to the development of a tropical storm in the Caribbean somewhat limited the slide in prices.”

(Online July 26, 2010; author’s e-mail: samf@ogjonline.com)

Related Articles

PBF Energy, PBF Logistics make management changes

12/12/2014 Matthew Lucey, currently executive vice-president of PBF Energy Inc., will succeed Michael Gayda as the company’s president. Todd O’Malley, current...

Repairs under way at ORPIC’s Muscat refinery

12/11/2014 Oman Oil Refineries & Petroleum Industries Co. (ORPIC) said it plans to resume operations at its 106,000-b/d Mina Al Fahal refinery near Muscat...

Phillips 66 advances plans for splitter at Sweeny refinery

12/11/2014 Phillips 66 has filed an application with state regulators for a permit to build a condensate splitter at its 247,000-b/d Sweeny refinery in Old Oc...

Samref wraps Yanbu refinery revamp

12/11/2014 Saudi Aramco-Mobil Refinery Co. Ltd. (Samref), a 50-50 joint venture of Saudi Aramco and ExxonMobil Corp. subsidiary Mobil Yanbu Refining Co. Inc.,...

BPCL adds petrochemicals to Kochi refinery expansion

12/09/2014 Bharat Petroleum Corp. Ltd. (BPCL), Mumbai, plans to diversify into petrochemicals production as part of the ongoing integrated expansion and upgra...

Moody's: E&P spending to dip as crude oil prices slide

12/08/2014 Weakening crude oil prices will cut exploration and production spending by independent producers in the US next year and make integrated oil and ga...

Firms' third-quarter earnings climbed amid lower crude oil prices

12/08/2014 A sample of 58 oil and gas producers and refiners based in the US recorded a combined 38% jump in profits for this year's third quarter compared wi...

Reliance expands desalination plant at Jamnagar refinery

12/05/2014 Reliance Industries Ltd. (RIL), Mumbai, is scheduled to receive proprietary PX technology from Energy Recovery Inc., San Leandro, Calif., as part o...

Start-up continues at Abreu e Lima refinery

12/05/2014 Petroleo Brasileiro SA (Petrobras) has initiated the start-up of furnaces in the atmospheric distillation unit at its Abreu e Lima refinery (Rnest)...

White Papers

AVEVA NET Accesses and Manages the Digital Asset

Global demand for new process plants, power plants and infrastructure is increasing steadily with the ...
Sponsored by

AVEVA’s Approach for the Digital Asset

To meet the requirements for leaner project execution and more efficient operations while transferring...
Sponsored by

Diversification - the technology aspects

In tough times, businesses seek to diversify into adjacent markets or to apply their skills and resour...
Sponsored by

Engineering & Design for Lean Construction

Modern marketing rhetoric claims that, in order to cut out expensive costs and reduce risks during the...
Sponsored by

Object Lessons - Why control of engineering design at the object level is essential for efficient project execution

Whatever the task, there is usually only one way to do it right and many more to do it wrong. In the c...
Sponsored by

Plant Design for Lean Construction - at your fingertips

One area which can provide improvements to the adoption of Lean principles is the application of mobil...
Sponsored by

How to Keep Your Mud System Vibrator Hose from Getting Hammered to Death

To prevent the vibrating hoses on your oilfield mud circulation systems from failing, you must examine...
Sponsored by

Duty of Care

Good corporate social responsibility means implementing effective workplace health and safety measures...
Sponsored by

Available Webcasts


On Demand

Optimizing your asset management practices to mitigate the effects of a down market

Thu, Dec 11, 2014

The oil and gas market is in constant flux, and as the price of BOE (Barrel of Oil Equivalent) goes down it is increasingly important to optimize your asset management strategy to stay afloat.  Attend this webinar to learn how developing a solid asset management plan can help your company mitigate costs in any market.

register:WEBCAST


Parylene Conformal Coatings for the Oil & Gas Industry

Thu, Nov 20, 2014

In this concise 30-minute webinar, participants have an opportunity to learn more about how Parylene coatings are applied, their features, and the value they add to devices and components.

register:WEBCAST


Utilizing Predictive Analytics to Optimize Productivity in Oil & Gas Operations

Tue, Nov 18, 2014

Join IBM on Tuesday, November 18 @ 1pm CST to explore how Predictive Analytics can help your organization maximize productivity, operational performance & associated processes to drive enterprise wide productivity and profitability.

register:WEBCAST


US HYDROCARBON EXPORTS Part 3 — LNG

Fri, Nov 14, 2014

US LNG Exports, the third in a trilogy of webcasts focusing on the broad topic of US Hydrocarbon Exports.

A discussion of the problems and potential for the export of US-produced liquefied natural gas.

These and other topics will be discussed, with the latest thoughts on U.S. LNG export policy.

register:WEBCAST


Careers at TOTAL

Careers at TOTAL - Videos

More than 600 job openings are now online, watch videos and learn more!

 

Click Here to Watch

Other Oil & Gas Industry Jobs

Search More Job Listings >>
Stay Connected