Summer Blend Gasoline increases Crude Oil demand

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dan_s
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Joined: Fri Apr 23, 2010 8:22 am

Summer Blend Gasoline increases Crude Oil demand

Post by dan_s »

One of the reasons that crude oil demand increases each year from Q1 to Q2 is that summer blend gasolines in the U.S. and Canada require more "black oil". Winter blend gasolines can be made from 10% butane, which is banned in the summer blends because it causes gasoline to evaporate faster and thus put more gas fumes into the air. Crude oil demand also increases when refineries complete their "shoulder season" maintenance projects.

OilPrice.com

- The US downstream landscape remains hamstrung by widespread refinery maintenance that peaked in February at 1.5 million b/d of offline capacity, just as gasoline demand is set to pick up amidst the summer quality change.

- US gasoline prices have already shown a slight uptick and are expected to grow further as refiners need to replace cheap butane with more expensive reformates to meet hot-weather vapor pressure requirements.

- Most US refining majors aim to operate at 85-89% capacity this quarter, down from 94-97% in Q4 2022, as years of healthy margins forced them to postpone maintenance for as long as possible.

- US gasoline production has rebounded from its January lows and is now (9.7 million b/d) within touching distance of late 2022 levels, but this comes at the expense of diesel which remains 0.5 million b/d below December readings. < Diesel inventories are near "critical levels" in some regions.
Dan Steffens
Energy Prospectus Group
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