Refineries across the United States have reduced their total crude oil processing so far in 2019, as demand for oil products both in America and abroad has weakened, according to EIA data compiled by Reuters market analyst John Kemp.
Year to date, U.S. refiners’ crude processing has declined for the first time since the 2008-2009 crisis.
Faced with weaker demand at home and weakening demand abroad, and amid a fuel glut in Asia, refiners in the U.S. have processed lower volumes of crude oil so far this year. The cutting of rates has helped refiners avoid a fuel glut domestically, but lower processing rates have built an oversupply in crude, Kemp notes.
The inventory builds have been weighing on crude oil prices.
But at the same time, crude builds have supported refining margins, Kemp argues.
According to EIA’s latest weekly inventory report, in the week to November 15, the utilization rate at U.S. refineries stood at 89.5 percent. This compares with utilization of 92.7 percent for the same week last year and with 91.3 percent for the week to November 17 two years ago.
The cumulative daily average crude oil input to refineries has been 16.593 million barrels of oil (bpd) so far this year. This is down from last year’s cumulative daily average crude oil input of 16.908 million bpd, or a 1.9 percent decline year on year, EIA’s data shows.
Some of the decline in crude oil input into refineries could be attributed to the shutdown of the Philadelphia Energy Solutions refinery complex with a total refining capacity of 335,000 bpd, which was the largest such complex on the Eastern seaboard, before several explosions and a huge fire damaged the complex in June this year.
But processing rates in other U.S. PAD districts have also dropped so far this year—by 1.6 percent on the Gulf Coast and by 2.2 percent on the West Coast, according to EIA data compiled by Kemp.
By Tsvetana Paraskova for Oilprice.com
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