EIA: Fuel Stocks Swell as Refiners Ramp Up Production


   
Karim Bastati
DTN Analyst

   VIENNA (DTN) -- U.S. inventories of gasoline and middle distillates 
continued to expand in the last week of November, according to Energy 
Information Administration data published Wednesday (12/3). The product builds 
were typical for the season as refiners ramp up operations in the last quarter 
of the year.

   Crude oil net inputs clocked in at 16.88 million bpd in the week ending 
November 28, in line with year-ago levels, and slightly above the three-year 
average pace. On the four-week average and the cumulative daily average, they 
were within 0.6% of levels this time last year -- despite a 166,000-bpd 
year-on-year decline in operable capacity.

   The highest refining margins in years, coupled with a global refining rut 
and tight middle distillate inventories, have incentivized refiners to maximize 
operations. While crack spreads have eased with the end of a diesel rally that 
peaked in mid-November, they remain at their highest since early 2023. Further 
supporting margins is the drop in crude oil prices, which has more than made up 
for increases in other operational costs.

   Despite a 4.5 million bbl build in gasoline inventories and a 2.1 million 
bbl build in distillate fuel oil stocks, U.S. transportation fuel stockpiles 
remained near the lower end of historical norms. Total gasoline inventories 
were in line with year-ago levels, while diesel and heating oil stocks 
continued to trail 2024 levels, down 3.2% year-on-year.

   The margin-induced refining push has led to some delayed maintenance in the 
fall season, which typically implies a steeper pullback than usual, starting 
less than a month from now. For now, high product prices and healthy margins 
continue to incentivize maximal utilization.

   Inventories should not expect much respite, however. Domestic demand is 
close to year-ago levels, and stronger international demand has been pulling 
more barrels onto the export market, all while the steep backwardation in 
diesel futures is disincentivizing excess barrel storage.




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