Reuters analyst John Kemp noted that US refiners have been slowing crude processing last week due to the faltering recovery of the three major fuels’ demand.
Data from the US Energy Information Administration showed that on the week ended July 17, US refiners processed an average of 14.20 million bpd, down from two weeks ago’s 14.34 million bpd. Refinery crude processing rates were still below the seasonal average over the last five years at 17% or 2.8 million bpd.
Even when the change is not that significant, it showed the change of trend from the robust and consistent growth since early May. The slowing economic recovery has dragged down the strategy and prompted refiners to cut back production plans.
Fuel inventories are still high after many regions’ lockdowns in April and May which had driven refiners to slowly ramped up processing to wait for stocks to get back to more normal levels.
Last week, petroleum supplied to the domestic US market slumped by more than 800,000 bpd and has not shown any increase since mid-June. Gasoline supplied was lower by 12% from the previous five-year seasonal average, while distillate and jet fuel were each at 20% and 38% below average.
Kemp opined that the past week’s deterioration of distillates and jet fuel supplied was of no great significance as the supply has been extremely volatile on a weekly basis. On the other hand, the resurgence of coronavirus cases has been defeating the gasoline demand only two weeks ago.
The facts highlighted the uneven, incomplete, and halting recovery in global fuel consumption as major economies have started to reemerge after lockdowns.
Kemp commented that the management of fuel production in this situation would still be a major challenge for refiners while also complicates the issue for the Organization of the Petroleum Exporting Countries and its partners in the wider OPEC+ producer group for the remainder of the year.
