Refinery input trends
US crude oil refinery inputs averaged 15.9 million barrels per day (or MMbbl/d) during the week ended April 3, increasing by 201,000 barrels per day (or bpd) compared to the prior week’s average.
Refinery inputs rose as refineries prepare for the peak summer driving season, which lasts from April through September.
Demand for crude inputs is high during peak driving season when gasoline demand rises. This is bullish for crude prices, which in turn is bullish for major oil producers such as Occidental Petroleum (OXY), Apache Corp (APA), Pioneer Resources (PXD), and ConocoPhillips (COP). All These companies are components of the Energy Select Sector SPDR ETF (XLE) and make up 12.4% of the ETF.
Last week, the increase in crude inputs increased refinery operating levels by 0.7% to touch 90.1% of operable capacity. Analysts’ expectations called for a 0.4% increase.
The fact that a robust refinery demand is not sufficient to absorb the millions of barrels of oil that are being produced should give you an idea of the large margin by which supply currently outstrips demand in the United States.
Refineries are the main source of crude demand. Refinery input levels affect inventory draws and builds. So refining throughputs affect inventory levels, not only for crude oil but also for refined products such as gasoline and distillates. We’ll discuss inventory levels for these products in the next parts of this series.