API: US refiners break April gasoline record

Nick Snow
OGJ Washington Editor

WASHINGTON, DC, May 21 -- US refiners broke their April monthly gasoline production record with 9.1 million b/d of average production last month, the American Petroleum Institute said. Output was the second highest for any month after March’s 9.3 million b/d average, it added.

Gasoline demand, which API measures as deliveries, climbed 2.2% year-to-year in April to an average 9.1 million b/d, while US refinery utilization rates rose 3.6% to 85.5% and gasoline imports plunged 20.7% to an average 762,000 from April 2009, API said in its latest monthly statistical report.

“US refiners are meeting the gasoline demands of American consumers,” observed API Chief Economist John C. Felmy. “We are seeing that in production statistics, in refinery utilization rates, and in motor gasoline inventories.” API’s statistics showed that US gasoline stocks totaled 221.2 million bbl at the end of April, 4.5% higher than their 1.7 million bbl level on Apr. 30, 2009.

“I think this reflects an improving economy, irrespective of what’s happening in Greece and elsewhere in Europe,” Felmy told reporters during a May 20 teleconference. “There’s also been a sharp crude oil and gasoline price decline, which followed increases earlier in the year.”

Distillate surge
Distillate fuel oil deliveries, which Felmy said historically correlate strongly with economic activity, reversed recent declines by surging 6.7% year-to-year in April to an average 3.7 million b/d, according to API. They had declined 29 out of the previous 30 months since October 2007, it noted.

Deliveries of low-sulfur distillate, which is used primarily for highway transportation, increased 3% year-to-year in April to an average 3.3 million b/d in only their third monthly increase since June 2008, API said.

The product supplies and inventories bode well for the upcoming summer driving season, Felmy indicated. “Current national gasoline inventories are above last year and the historic average,” he said. “More precisely, national inventories of gasoline are about 7% above both last year’s level and the 5-year average.

“We’ve seen ultralow-sulfur distillate take an increasingly large share of the distillate market. I would expect this to continue offroad as well as onroad,” the API official continued. “We have noticed that there have been proposals to mandate ultralow-sulfur heating oil in some states, and are concerned about the market impacts of rushing to a less than 15 ppm level.”

Crude production
US oil production, meanwhile, continued to remain near 5-year peaks in April at an average 5.5 million b/d for a third consecutive month, up 4.2% year-to-year and marginally lower than in March, API said. Production in the Lower 48 last month averaged 4.9 million b/d, 6.8% more than April 2009’s 4.6 million b/d, while Alaska production declined 0.2% year-to-year to 654,000 b/d from 653,000 b/d.

Natural gas liquids production averaged 1.9 million b/d in April, 4.8% higher year-to-year and 2.4% more than in March, according to API. It said that the number of oil and gas drilling rigs climbed from March’s level as Texas, Louisiana, and North Dakota showed increased activity.

The Apr. 20 rig accident and subsequent crude oil spill apparently has not had much impact on Gulf of Mexico output, Felmy said. “Based on [the US Department of Energy’s] latest figures, it appears that only a small fraction of offshore production has been shut in,” he said.

He referred reporters to the US Energy Information Administration’s May 19 “This Week in Petroleum” report, which said that less than 0.1% of the gulf’s crude production was shut in because of the spill. It noted that Gulf Coast refiners, which represent about half of the total US refining capacity, rely on tanker shipments for most of their crude supplies. Those shipments have not been disrupted by the spill and cleanup activities, according to other reports.

Contact Nick Snow at nicks@pennwell.com.