The U.S. is awash with gasoline in large' : are recovering from pandemic?
American oil refiners are enthusiastic to boost gasoline production for the summer driving season, leaving the country awash with fuel at a time when the rebound in consumption is still uncertain.
Unlike the US stockpiles, the U.S. gasoline supplies have fallen to the highest in three months while a measure of demand jumped to a three-month low, according to a government report published Wednesday.
The ballooning supplies will show how the path of recovery from the devastating effects the Pandemic has had on demand may be volatile for the next few months even as the world's top oil consumer opens up.
Refiners may have gotten ahead of themselves, given that these demand figures and draws are likely to continue to be lumpy week over week as the whole US opens up, said Trisha Curtis, co-founder of PetroNerds LLC in Denver.
Stockpiles of gasoline increased to about 7 million barrels last week in the highest since late February, the U.S. Energy Information Administration said on Wednesday.
Markets were quick to account for the change in supply chain. The premium on a barrel of gasoline at East Texas Intermediate crude futures fell more than 3%. Oil futures also slipped on concerns over new fuel inventories and ramping demand.
Following a busy Memorial Day holiday, the next milestone for gasoline markets will be the long weekend over the Fourth of July with millions expected to hit the road. Family trips and the return of workers to the office could help in getting supplies down, but the timing remains uncertain for that.
Given that refiners already purchased crude oil earlier this month to process it, they’re stuck with those supplies, Houston oil analyst Andy Lipow said.
The situation for refiners is not bad yet, said Thomas Finlon, chief operating officer of Brownsville LLC, a Houston based retail and logistics company.
'This probably isn't a tipping point for being on the brink of a glut, even not close to it, said Finlon. 'But it seems that the luster has worn off in terms of the market continuing to rally.
Meanwhile, refinery utilization on the Gulf Coast, the nation's fuel-making hub, was 92.9% last week, the highest since January 2020, declared the EIA.
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