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Gasoline Production Supports the Rise in Gasoline Stocks

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Gasoline production  

US gasoline production increased by 122,000 bpd (barrels per day) to 9.7 MMbpd (million barrels per day) for the week ending February 12, 2016. The rise in US gasoline production led to a rise in gasoline inventory, as was covered in the previous part of the series.

Current weekly US gasoline production is 5.3% higher than gasoline production of 9.2 MMbpd in the same period during 2014. Gasoline production rose due to a higher crack spread and record low crude oil prices, which were covered in the first part of the series.

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US gasoline production by region

US gasoline production rose the most in the Gulf Coast, Midwest, and East Coast regions of the United States. In contrast, weekly gasoline imports fell to 0.56 MMbpd for the week ending February 12, 2016.

Historic high gasoline stocks and gasoline production will negatively affect oil refiners such as Western Refining (WNR), Valero (VLO), Tesoro (TSO), Marathon Petroleum (MPC), and Northern Tier Energy (NTI). In contrast, a wide contango market and rising US refined products stocks benefit oil tankers such as Teekay Tankers (TNK), Frontline (FRO), and DHT Holdings (DHT).

US gasoline demand 

The rise in US gasoline demand may have motivated US refiners to produce more gasoline and distillates. US gasoline demand rose to 9.2 MMbpd for the week ending February 12, 2016. The rise in gasoline demand is due to record low gasoline prices.

The volatility in crude oil prices influences ETFs and ETNs such as the United States Oil ETF (USO), the VelocityShares 3x Long Crude Oil ETN (UWTI), the Direxion Daily Energy Bull 3X ETF (ERX), the VanEck Vectors Oil Services ETF (OIH), and the ProShares UltraShort Bloomberg Crude Oil ETF (SCO).

We’ll discuss distillate stocks and production in the next two parts of this series.

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