US refinery inputs
In its weekly report on October 28, 2015, the EIA[1. U.S. Energy Information Administration] reported that US crude oil refinery inputs averaged ~15.6 MMbpd (million barrels per day) during the week ended October 23, 2015. This was a rise of 271,000 bpd (barrels per day) compared to the prior week’s average.
The rise in refinery inputs caused the refinery utilization rate for the week ended October 23 to rise to 87.6%. This was 1.2 percentage points more than the 86.4% utilization rate from the previous week.
Compared to last year, the current refinery input levels were ~3.2% higher. The four-week average refinery input level of 15.4 MMbpd for the week ended October 23 was ~1% higher than last year.
However, the four-week average fell ~0.6% week-over-week. Looking at four-week averages gives you a broader view of what is otherwise a volatile number week-over-week.
What this means
The uptick in refinery inputs is an indication that seasonal maintenance is approaching its end. Usually, higher crude oil inputs indicate that refiners such as Marathon Petroleum (MPC) and Tesoro (TSO), as well as refining MLPs such as Calumet Specialty Products Partners (CLMT) and CVR Refining (CVRR), are raising throughputs due to the current crude oil (USO) and refined product price environment. Marathon Petroleum and Tesoro make up 3% of the Vanguard Energy ETF (VDE).
The rise in refinery inputs for the week ended October 23 could be another major reason for the 6.3% rise in crude oil prices on Wednesday. WTI closed at $45.9.
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 such as gasoline and distillates. We’ll take a look at inventory levels for these products later in this series.