The EIA Estimated That US Crude Oil Output Held Steady At A Record High Of 13.2 Million Barrels/Day For A 6th Straight Week

Gasoline prices are trading lower for a 3rd straight day and holding just a nickel above their lows of the year. Diesel prices saw a healthy bounce off of early morning lows Wednesday thanks to healthy inventory declines reported by the DOE, but have already given back those 3-cent gains this morning.   

PADD 1 refinery runs jumped by 63mb/day last week (more than 10% of the region’s total run rate) as 6 weeks of maintenance at the Delta/Monroe refinery in Trainer PA comes to an end. So far that supply hasn’t dampened the enthusiasm in the market for colonial line space which continued to rally for both gasoline and diesel Wednesday, but as the refinery brings its remaining units back up (roughly another 100mb/day) that might soon change, or it may force Gulf Coast basis values to fall even lower. 

Those big spreads for shipping space to New York from the gulf coast are also leaving markets across the South East shorter than normal as the big shippers decide they can make more money keeping barrels moving north rather than dropping them off along the way. So far supplies are still much better than they were last November when the world still acted like it was running out of diesel, but tight allocations and short-term terminal outages than we have experienced in the past 6-months are becoming common again. 

The EIA estimated that US crude oil output held steady at a record high of 13.2 million barrels/day for a 6th straight week, despite the slowdown in drilling activity over the course of the year. The agency also changed up its weekly report structure, adding new data points to show the volumes of refinery feedstocks and natural gas liquids are being blended into the crude oil supply network, which was a big reason the EIA admitted its oil stats and demand estimates have been so wrong in recent years. The new report also will begin to split out propane inventories into a “ready for sale” category and an unfractionated category that includes Propylene which should give a more realistic view of the rapidly growing propane and petrochemical markets. 

So far there have not been any plans announced to include Renewable Diesel as a line item on the weekly report, despite that fuel’s rapid expansion, which means roughly 50% of California’s diesel inventory (and demand) won’t be properly showing up on these reports.

Chinese refinery runs dipped in October after reaching a record high in September in the face of rapidly declining crack spreads. Despite the reductions, China’s refinery throughput is still 9% higher than a year ago, and the fleet of new facilities built over the past couple years are likely to continue putting pressure on facilities across the Pacific basin. 

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