Refinery input trends
In its Wednesday inventory report, the EIA (U.S. Energy Information Administration) reported that US crude oil refinery inputs averaged 16.2 MMbpd (million barrels per day) during the week ended April 10. This represents an increase of 283,000 bpd (barrels per day) over the previous week’s average.
Inputs rose as refineries prepare for the peak summer driving season, which lasts from April until September. The increase also explains the lower increase in crude inventories that we observed in Part 1 of this series.
Demand for crude inputs is high during peak driving season, when gasoline demand rises. This is bullish for crude prices, which is in turn positive for major oil producers such as Anadarko Petroleum (APC), Hess (HES), Pioneer Resources (PXD), and ExxonMobil (XOM). All of these companies are components of the iShares Global Energy ETF (IXC) and together make up ~18% of the ETF.
Last week’s increase in crude inputs pushed up refinery operating levels by 2.2 percentage points so that they’re now at 92.3% of operating capacity. Analysts’ expectations had called for only 0.4 of a percentage point increase.
Refineries are the main source of crude demand. Refinery input levels affect inventory draws and builds. So, refining throughputs affect inventory levels for crude oil as well as for refined products such as gasoline and distillates. We’ll discuss inventory levels for these products in the next parts of this series.