Analysis of U.S. EIA data: U.S. refinery throughputs slide lower on poor margins

New York - November 18, 2009

U.S. refinery throughputs last week fell another 87,000 barrels per day (b/d) to 14.038 million b/d, on poor demand and margins, the lowest level in more than a year, an analysis of data released Wednesday by the Energy Information Administration (EIA) showed.

Gross inputs declined on the Atlantic, Gulf and West coasts while edging higher in the Midwest and Rocky Mountain regions.

Despite exceptionally low run rates, U.S. crude stocks fell 887,000 barrels to 336.789 million barrels with a drop in production and a dip in imports – due to Tropical Storm Ida – behind the small draw. Still, crude stocks are 20.299 million barrels above the five-year average and 23.241 million barrels above year-ago levels.

U.S. crude imports dipped 77,000 b/d to 8.579 million b/d with a huge drop on the Gulf Coast nearly offset by increases on the Atlantic Coast, Midwest and West Coast. Imports along the Gulf Coast fell 838,000 b/d to 4.279 million b/d due to Ida shipping disruptions, but those cargoes should reappear in next week's report, blunting the bullish impact of this week's drop. Still, it marked the lowest level of crude imports into the Gulf Coast since the week ending September 30, 2005 when Hurricane Rita decimated oil operations in the region.

While total U.S. oil demand rebounded from the prior week's anemic 18.315 million b/d, readings remained well below year-ago levels, leaving refiners with no incentive to boost throughputs. Total U.S. oil demand climbed 191,000 b/d to 18.506 million b/d. On a four-week moving average, total U.S. oil demand at 18.622 million b/d was 799,000 b/d below year ago levels.

While crude imports appeared to have been affected by Ida, gasoline imports actually jumped along the Gulf Coast by 119,000 b/d to 149,000 b/d. Total U.S. gasoline imports dropped 148,000 b/d to 584,000 b/d, with imports on the Atlantic Coast falling 204,000 b/d to 435,000 b/d.

The offset to low imports was an increase in production as refiners pushed gasoline yields to an exceptionally high 64.51%. Gasoline production rose 137,000 b/d to 9.056 million b/d. Distillate production was essentially unchanged at 4.031 million b/d. The increase in output of light-end products despite the decline in throughputs was evidence that refiners continued to run fluid catalytic crackers hard. Crude inputs were down only 31,000 b/d to 13.794 million b/d, cutting into output of heavier products.

Output of middle distillates edged down 23,000 b/d to 4.031 million b/d, with production of heating oil taking the biggest hit. Heating oil output fell 75,000 b/d to 376,000 b/d as abnormally warm weather along the Atlantic Coast trumped demand for winter fuels.

Total middle distillate stocks decreased 328,000 barrels to 167.397 million barrels, with the decline concentrated in low sulfur and ultra-low sulfur diesel. Middle distillate inventories were still 41.233 million barrels above the five-year average and 40.517 million barrels above year-ago levels, imposing surpluses against the averages that are not apt to erode anytime soon.

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