This article seems to paint a picture that is different from "refinery inputs [are] up," "Days of supply are approaching the danger zone" and "inputs of oil to our refineries will stay high because refined production inventories are too low." In essence, Kemp says inputs are down y/o/y because demand for refined products has been flat. Is he wrong?
COLUMN-U.S. refiners limit crude processing amid slack fuel demand: Kemp - Reuters News
22-Aug-2019 14:25:36
John Kemp is a Reuters market analyst. The views expressed are his own
• Chartbook: https://tmsnrt.rs/2NvuABQ
By John Kemp
LONDON, Aug 22 (Reuters) - U.S. refineries have cut the volume of crude processed so far this year, but stocks of gasoline and distillates remain ample, highlighting the slack demand for transportation fuels.
Fuel consumption has stalled, part of a worldwide slowdown in oil demand associated with the slackening of manufacturing and freight activity.
U.S. refineries have reduced crude input by an average of 247,000 barrels per day since the start of the year compared with the same period in 2018, according to data from the U.S. Energy Information Administration (EIA).
Year-to-date processing rates have fallen for the first time since 2011 and by the most since the recession of 2008/09 (“Weekly petroleum status report”, EIA, Aug 21).
Refinery crude consumption has fallen by around 56 million barrels so far compared with the same period in 2018 (https://tmsnrt.rs/2NvuABQ).
Refineries cut processing sharply during the regular maintenance season in March and April and have never made up the shortfall.
Processing has remained at or below prior-year rates throughout the summer driving season, normally the highest demand of the year.
Philadelphia Energy Solutions’ 335,000 bpd refinery on the East Coast has been shut since a fire and explosion on June 21, which may have contributed to the loss of crude processing.
But processing was already running below prior-year rates before the plant exploded and has been below 2018 rates for 13 out of the last 16 weeks since the start of May.
Refiners on the East Coast have cut processing by an average of almost 120,000 bpd so far this year (mostly due to the Philadelphia explosion).
But they have also reduced processing by 87,000 bpd in the Midwest, 15,000 bpd along the Gulf Coast and 45,000 bpd on the West Coast.
Despite the reduction in processing, there has been no shortage of either gasoline or distillate fuel oil, with gasoline stocks level with last year and distillates comfortably above it.
Fuel consumption is broadly unchanged compared with 2018, with the volume of gasoline supplied to domestic customers flat so far this year and distillate consumption down slightly.
Forward refining margins for gasoline and distillates delivered at the end of year do not provide refiners with any significant incentive to boost processing compared with normal seasonal patterns.
Fuel consumption is stuck in the doldrums and unlikely to accelerate much until the domestic and international economies improve.
U.S. refiners limit crude processing amid slack fuel demand
Re: U.S. refiners limit crude processing amid slack fuel dem
Demand for hydrocarbon based liquid fuels and feedstock is over 101,000,000 barrels per day TODAY. This is the highest global demand EVER.
U.S. refinery inputs earlier in the year were down because (a) maintenance season was extended for some refineries because they had to adjust for the IMO 2020 regulations on the horizon and (b) because of the big refinery fire in PA. That refinery has been shut down permanently but for some unknown reason EIA still has that refinery's capacity included in the U.S. total refinery capacity.
BTW if you take the PA refinery out of the denominator, U.S. refiners ran at close to 96% of capacity for the week ending August.
As I have posted here many times, U.S. inventories of crude oil, gasoline and jet fuel are quite low when measured on days of supply. Propane inventory is the only one that is way over where it should be.
John Kemp is based in London. I think his view of the world is somewhat slanted because of the decline in Europe.
He wrote an article the other day that said U.S. oil production is surging. It clearly is not surging, so I sent him a note proving it.
U.S. refinery inputs earlier in the year were down because (a) maintenance season was extended for some refineries because they had to adjust for the IMO 2020 regulations on the horizon and (b) because of the big refinery fire in PA. That refinery has been shut down permanently but for some unknown reason EIA still has that refinery's capacity included in the U.S. total refinery capacity.
BTW if you take the PA refinery out of the denominator, U.S. refiners ran at close to 96% of capacity for the week ending August.
As I have posted here many times, U.S. inventories of crude oil, gasoline and jet fuel are quite low when measured on days of supply. Propane inventory is the only one that is way over where it should be.
John Kemp is based in London. I think his view of the world is somewhat slanted because of the decline in Europe.
He wrote an article the other day that said U.S. oil production is surging. It clearly is not surging, so I sent him a note proving it.
Dan Steffens
Energy Prospectus Group
Energy Prospectus Group
Re: U.S. refiners limit crude processing amid slack fuel dem
John seems credible and objective to me and I have never believed him to be biased.
Something is obviously up this year. In the past the 2nd and third quarters were strong demand periods and if demand is so high and production has slowed, then it should profoundly show up in the inventory reports as projected by RJ.
In the past when EIA reports were questioned, the doubts could be confirmed by the missing barrels analysis. I haven’t seen any such reports.
My concern about production slowing is that it may be currently curtailed by DUCs or otherwise until a spate of pipelines from the Permian are placed in service.
Further I believe a Trump will look the other way with China’s purchases of Iranian oil and I them making deals with Madura in Venezuela.
I truly believe we should review the reporting from all credible sources and not just those who seem to be the news we are looking for. RJ has been off in their forecasts in the past though I pray every night their current forecast comes true.
Seems to me that we may be stuck with oil in the 50’s for awhile.
Something is obviously up this year. In the past the 2nd and third quarters were strong demand periods and if demand is so high and production has slowed, then it should profoundly show up in the inventory reports as projected by RJ.
In the past when EIA reports were questioned, the doubts could be confirmed by the missing barrels analysis. I haven’t seen any such reports.
My concern about production slowing is that it may be currently curtailed by DUCs or otherwise until a spate of pipelines from the Permian are placed in service.
Further I believe a Trump will look the other way with China’s purchases of Iranian oil and I them making deals with Madura in Venezuela.
I truly believe we should review the reporting from all credible sources and not just those who seem to be the news we are looking for. RJ has been off in their forecasts in the past though I pray every night their current forecast comes true.
Seems to me that we may be stuck with oil in the 50’s for awhile.