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US refiners’ self-help pays off as cracks improve amid runs near 2008 lows

US refiners are seeing cracks for both gasoline and diesel gain ground as the price of crude weakens on lack of demand and oversupply, an analysis from S&P Global Platts showed.

By disciplining themselves to keep runs low to reduce product overhang and match output with demand’s drastic fall-off from coronavirus-related stay-at-home orders, refiners are seeing some upticks in product cracks.

US refiners have cut back runs dramatically, running at 69.1% of refinery capacity for the week ended April 10, US Energy Information Administration data showed Wednesday, the lowest since September 19, 2008, when utilization dropped to 66.7% during the global financial meltdown.

Cutbacks of crude and feedstocks to refineries reduced the nation’s crude runs by almost 1 million b/d, to 12.67 million b/d from the 13.6 million b/d on week and down from 16.08 million b/d a year earlier, EIA data showed.

USAC refiners cut back to about 50% of capacity
US Atlantic Coast refiners were running at about 50% of capacity. Crude inputs fell to 454,000 b/d among the region’s five refineries for the week ended April 10.

Regional refinery operable refining capacity is 889,000 b/d since the closure of Philadelphia Energy Solutions 335,000 b/d refinery in August. EIA data includes Philadelphia Energy Solutions in the region’s total refining capacity.

So far this week, USAC gasoline cracks for CBOB versus Canada’s Hibernia crude are averaging $2.59/b compared with minus $2.47/b the week ended April 10, Platts assessments show. The price of Hibernia is down almost $4/b week on week to $24.09/b, while the price of a CBOB cargo is averaging $26.69/b.

Midwest gasoline cracks rise as stocks fall
Midwestern gasoline cracks remain in negative territory, mired by lack of outlet for gasoline and diesel. But they have ticked higher as refinery runs fell by 8.9 percentage points to average 65.3% utilization for the week ended April 10, pulling down total gasoline stocks by 300,000 barrels to 60.2 million barrels.

Chicago CBOB cracks versus WTI Cushing are averaging minus $9.61/b so far this week, up from the minus $12.61/b the week ended April 10. However, Group 3 suboctane cracks remain deeply mired in negative territory versus WTI Cushing, although run cuts have helped push the crack up to minus $10.14/b compared with the minus $15.52/b the week earlier.

Midwest ULSD got some support from impending agricultural demand, with Group 3 ULSD cracks versus WTI Cushing moving up to $18.68/b so far this week from last week’s average of $17.45. Market sources reported there are “tractors on the ground” as the harvest season begins.

USGC gasoline cracks rise as demand ticks higher
US Gulf Coast CBOB cracks for a plant running Light Louisiana Sweet are averaging $2.69/b so far this week, compared with 50 cents/b for the week ended April 10, Platts data shows.

USGC refinery runs dropped to 75.9% of utilization for the week ended April 10, a level not seen since Hurricane Harvey wreaked havoc on the USGC in September 2017.

Conversely, total US gasoline demand rose slightly to 5.08 million b/d, up from the 5.06 million b/d the week earlier, EIA data showed.

USGC ULSD cracks this week are softer, averaging $15.85/b versus LLS as refiners shift into maximum distillate mode to counter on stronger ULSD cracks.

ULSD cracks weakened despite an almost 300,000 b/d rise in distillate exports to 1.56 million b/d for the week ended April 10. Most US distillate exports come from USGC refiners.

USWC gasoline cracks rise on lower runs
US West Coast refiners are seeing gasoline cracks rise, with CARBOB cracks versus Alaska North Slope averaging minus $8.91/b so for this week, compared with the minus $13.38/b the week ended April 10.

USWC refinery runs fell to 65.1% of capacity for the week ended April 10, down almost 4 percentage points from the week earlier, EIA data showed.

In California alone, refinery utilization fell by 6.1% week on week, with CARB gasoline production 6.6% lower at 522,900 b/d for the week ended April 10, data from California’s Weekly Fuels Watch showed.

California data shows the state’s CARB diesel production rose 1.5% for the week ended April 10 to around 197,000 b/d. So far this week, CARB diesel cracks are softer at $9.48/b compared with $12.85/b the week earlier.


Source: Platts

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