US Refiners Ran More Than 17 Million Barrels/Day Last Week For The First Time Since 2019

US Refiners ran more than 17 million barrels/day last week for the first time since 2019. That excess supply hit a market that’s facing sluggish demand and helped force gasoline and diesel prices to fresh multi-month lows Thursday. While prices attempted to bounce back overnight, the charts suggest there’s a good chance we’ll see prices slide another 15-20 cents as we move into June.

Today is the last trading day for June RBOB and ULSD futures, so for the NYH and Group 3 markets that haven’t already transitioned to trading vs July futures, watch the RBN and HON contracts for price direction today.

Refined product prices were already moving lower to start Thursday’s session and then the DOE’s weekly status report pushed prices sharply lower as the higher refinery runs coupled with weak demand estimates for a holiday week to push inventories higher across the country. While we aren’t yet seeing the huge negative basis values that drove several refiners to cut run rates last winter, crack spreads are sliding to their lowest levels of the year, and are approaching break even levels in some markets – particularly in the Midwest.

Even though PADD 5 refinery runs spiked to their highest level of the year last week, LA diesel basis still saw a strong rally following a report of unplanned flaring at PBF’s Torrance refinery Thursday Morning. There are also growing signs that the glut of renewable diesel that has held over the area for most of the year is starting to subside as producers realize they’d rather make money than renewable fuel.

More severe weather is targeting the Houston area this morning, with a large portion of refinery row expected to see at least some thunderstorm activity. While these inland storms don’t have the destructive wind or surge of a hurricane, power outages and flooding are a concern. Already Thursday the P66 Sweeny TX refinery reported multiple units were taken offline following loss of power, but those units were reportedly brought back online in under 6 hours.

Speaking of Hurricanes, the Atlantic Hurricane season officially begins tomorrow, with forecasts calling for the busiest season on record. The positive from yesterday’s report is that US refiners are heading into the season with the most comfortable cushion in terms of capacity and inventories that we’ve seen since 2020, so there is some slack in the supply network to act as a buffer to any storm-related supply disruptions.

OPEC & Friends are meeting this weekend, but only virtually, which is taken as a sign by many that the cartel will simply extend its current output agreement. Meanwhile, a group of US Senators is alleging that the US oil industry has colluded with OPEC to keep oil prices high. This is the same group of Senators that wants to get rid of oil refineries while still having cheap gasoline.

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