US Refining Slumps amid Rising Fuel Stocks: Reuters

US oil refineries have been processing oil at the fastest seasonal rate since the pandemic, but rising fuel inventories have begun to weigh on crack spreads, likely signalling a slowdown to come, Reuters said.

• Refineries were employing 95% of their operable capacity, up from 94% last year and the highest level since 2019, EIA data showed.
• However, intensive processing is producing more gasoline and diesel than is being used domestically or exported, causing stocks to build.
• Stocks were 1m bbl above the previous 10-year seasonal average.
• Nonetheless, expectations of a more active Atlantic hurricane season risk major disruption to major refineries on the USGC, requiring slightly higher inventories.
• However, inventories cannot continue building at current rates without adding downside pressure to margins and prices, Reuters said.
• This will likely push refiners to slow down refinery processing in the near future to add some relief to margins and limit the summer inventory build.