May 24, 2019 Analysis of EIA Refining Data and Price Forecast

According to the EIA, heading into the 2019 Memorial Day weekend, regular gasoline prices averaged $2.85 per gallon (gal) nationally on May 20, slightly lower than last year’s price of $2.92/gal before the holiday weekend. See the graph at Memorial Day gasoline prices.

Refining

Based on calculations using data submitted by refiners, EIA’s (Short Term Forecast) estimate for US domestic production has been running consistently high by about 500 MBD (This week, our calculated local production is 9074 MBD, compared to EIA’s estimate of 9589 MBD.)

Refinery utilization was 89.6 percent, with the highest rate in PADD 3 at 93.8 percent. Basically, refineries are not stressed and should be operating efficiently, producing products at low cost and therefore maximizing profits as long as they sustain high wholesale prices. At these lower refining rates, refiners can process less expensive low API gravity, high sulfur crude oil efficiently. Lower refining rates appear to be matching product demand since product inventories are not increasing. The lower demand may be an indication that consumers are willing to wait for lower prices before traveling.

Refiners used 45% imported crude oil and 54.7% US production. Top sources of crude oil in MBD for the week of 5/17/19 were:

Canada – 3,688

Saudi Arabia – 571

Venezuela – 49

Mexico – 483

Iraq – 211

Colombia – 297

Nigeria – 191

Ecuador – 129

Brazil – 182

Kuwait – 69

 

Crude Oil Inventories

Total crude oil stocks ended up at 477 Million barrels, an increase of 4.6 million for the week and more than 11 million barrels over the past two weeks. Increasing inventories may be occurring because refinery rates are lower than expected while planned imports and normal domestic production continue to be received into refinery tanks. All regions have sufficient capacity for more crude oil, but continued receipts at current prices may suggest that refiners are anticipating higher crude oil prices in the coming months.