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Refinery Inputs Fall Again: What It Means for WTI Crude Oil


Dec. 4 2020, Updated 10:52 a.m. ET

Refinery input trends

In its weekly report on June 3, the EIA (U.S. Energy Information Administration) reported that US crude oil refinery inputs averaged ~16.4 MMbpd (million barrels per day) during the week ending May 29. This was a decrease of 43,000 bpd (barrels per day) compared to the average the week before. However, it’s still higher than the levels last year.

Last week’s drop in crude oil inputs decreased the refinery operating levels by 0.4% to touch 93.2% of operable capacity. It was 93.6% the week before.

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What does this mean?

A decrease in demand for crude oil inputs is bearish for crude oil prices. In turn, this is negative for major oil producers like Hess (HESS), Chevron (CVX), Cimarex Energy (XEC), and ConocoPhillips (COP). All of these companies are part of the iShares US Energy ETF (IYE). They account for ~18% of the fund.

A decline in refiner demand is surprising considering that the US is in the summer driving season. It’s also bad news for refiners like Valero Energy (VLO). Last week’s decline in crude inventories occurred despite lower refinery demand and higher production and imports, as we discussed in Part 2.

Refinery demand

Refineries are the main source of crude oil demand. Refinery input levels affect crude oil inventory draws and builds. Refining throughputs affect inventory levels not only for crude oil, but also for refined products like gasoline and distillates. We’ll discuss inventory levels for these products in the following parts of this series.


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