US refinery inputs
In its weekly report on October 15, 2015, the EIA (U.S. Energy Information Administration) reported that US crude oil refinery inputs averaged ~15.3 MMbpd (million barrels per day) during the week ended October 9, 2015. This was a decrease of 292,000 bpd (barrels per day) compared to the prior week’s average.
The decrease in refinery inputs caused the refinery utilization rate for the week of October 9 to fall to 86%. This was 1.5 percentage points less than the 87.5% utilization rate from the previous week.
Compared to last year, the current refinery input levels were flat. The four-week average refinery input level of 15.7 MMbpd for the week ended October 9 was 0.3% higher than last year. However, the four-week average fell ~2% week-over-week. Looking at four-week averages gives you a broader view of what’s otherwise a volatile number week-over-week.
What this means
The downtick in refinery inputs is an indication that refiners such as Marathon Petroleum (MPC) and Tesoro (TSO) are performing maintenance work to prepare for the upcoming winter. Usually, lower crude oil inputs indicate that the above refining companies and refining MLPs such as Calumet Specialty Products Partners (CLMT) and CVR Refining (CVRR) are decreasing throughputs due to current crude oil (USO) and refined product price environment. MPC and TSO make up 3% of the Vanguard Energy ETF (VDE).
So the drop in refinery inputs for the week ended October 9 also drove the crAude oil inventory build that week. On the supply side, a rise in imports contributed to the inventory build. Read part 2 for more on this.
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.