Wednesday, May 17, 2023
U.S. oil refiners are gearing up to operate at up to 94% of their total processing capacity of 17.9 million barrels per day during the current quarter, driven by expectations of robust seasonal travel demand, as per company forecasts and analysts.
Strong prices and demand in recent months have incentivized refiners to exceed 90% utilization rates. In a positive sign indicating their confidence in sustained fuel demand, two refiners have even added units or boosted their output, reviving a practice that had vanished during the COVID-19 pandemic.
The current quarter traditionally witnesses heightened demand, with refiners ramping up gasoline and jet fuel production in preparation for the summer vacation season.
The motorist group AAA has predicted that the Memorial Day holiday weekend (May 27-29) will be the third busiest for auto travel since 2000, and airports will experience their most active period since 2005.
Comparatively, this quarter’s utilization rate of 94% surpasses the figures of the same period last year (91.3%) as well as those of 2020 (71.5%) and 2021 (87.8%) when the industry grappled with COVID-19-induced lockdowns, resulting in reduced fuel consumption and diminished profits.
The increased run-rate can be attributed to motor fuel stocks currently sitting below their 5-year averages. Gasoline and distillates inventories are estimated to be 7% and 16% lower than their respective averages, according to investment firm Tudor Pickering Holt & Co.
The surge in refining activities underscores the anticipation of a vibrant travel season and signals the industry’s belief in sustained demand for petroleum products as the economy recovers and travel resumes to pre-pandemic levels.
Wednesday, May 17, 2023
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