US refinery running rates are still below the seasonal norm despite the recovery of gasoline demand.
In the week ended July 3, gasoline stockpiles dropped by the most since mid-March, indicating a bullish oil market in the country. Even when the stocks remained below the five-year average for this time of year, the gasoline supply has been rising steadily every week since May 1.
However, refineries are still running at just about three-quarters of the normal utilization rate when normally, this peak of summer driving season prompted them to operate at nearly full capacity.
Analyst Robert Yawger of Mizuho Securities said that it was still too early to call that the oil industry has gone back to health. “The gasoline draw is just a baby step as the refinery utilization is still just at 77%. We still have a long way to go,” he said.
Moreover, another problem arose as refiners are trying to keep up with gasoline demand. The distillate supplies have been inflated as gasoline production must also produce diesel in the process. Last week, the diesel stockpiles supplied to the market were at the lowest level in ten years.
