US 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 US gross refinery inputs approached 18 million bpd was the week of 25 August 2017. Hurricane Harvey made landfall the following week, resulting in widespread refinery closures and shutdowns along the US Gulf Coast.
Despite record-high inputs, refinery utilisation as a percentage of capacity has not surpassed the record set in 1998. Rather than higher utilisation, refinery runs have increased with increased refinery capacity. US refinery capacity increased by 862 000 barrels per calendar day (b/cd) between 1 January 2011, and 1 January 2018.
The record-high US input levels are driven in large part by refinery operations in the Gulf Coast and Midwest regions, the Petroleum Administration for Defense Districts (PADDs) with the most refinery capacity in the country. The Gulf Coast (PADD 3) has more than half of all US refinery capacity and reached a new record input level the same week as the record-high overall US capacity, with four-week average gross refinery inputs of 9.5 million bpd 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 a record-high 4.1 million bpd for the week ending June 1.
US refineries are responding currently 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 US consumption – typically hits the highest level of the year in 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 years on record, at 9.8 million bpd. The four-week average of finished motor gasoline product supplied for the week ending 3 August 2018, was at 9.7 million bpd.
US distillate consumption, again measured as product supplied, is also relatively high, averaging 4.0 million bpd for the past four weeks, 64 000 bpd lower than the five-year average level for this time of year. In addition to relatively strong domestic distillate consumption, US exports of distillate have continued to increase, reaching a four-week average of 1.2 million bpd as of 3 August 2018. For the week ending 3 August 2018, the four-week average of US distillate product supplied plus exports reached 5.2 million bpd.
In its August Short-Term Energy Outlook (STEO), the EIA forecasts that US refinery runs will average 16.9 million bpd and 17.0 million bpd in 2018 and 2019, respectively. If achieved, both would be new record highs, surpassing the 2017 annual average of 16.6 million bpd.
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