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EIA data – Refinery maintenance season finally kicks in


The US EIA data for the week to 20 September has finally shown the first signs suggesting that the US refinery maintenance season has arrived. Refinery crude throughput, which had trended upwards over the past month instead of easing, especially from the end of the US driving season, dropped sharply, down 0.5mmb/d (-3.2%) WoW to 15.6mmb/d. Refinery utilisation fell 2.2% WoW to 90.3%, compared with market expectations of a 0.9% fall in utilisation. Nevertheless, refinery utilisation and crude throughput remain above the top of the seasonal range.

The bulk of the refinery turnaround occurred in the Gulf Coast PADD 3 region, where throughput was down 0.4mmb/d WoW. Industry periodicals have cited ExxonMobil’s 500kb/d Baton Rouge and Phillips 66’s 252kb/d Westlake refineries as undergoing maintenance in that region. The advent of the maintenance season might aid refining margins which have been hit by soft gasoline crack margins.

Implied all-products demand dropped 0.6mmb/d (-2.8%) WoW with only the ‘other oil products’ category seeing incremental demand. Even so, at 19.3mmb/d, all-products demand was slightly ahead of the top of the seasonal range. On a 52-week average, all-products demand is showing strengthening YoY growth, now over 1% for the first time since June 2011. The largest drop in implied demand was for distillates, which fell 0.5mmb/d WoW (-11.6%) to 3.6mmb/d but were still around the seasonal average. Gasoline demand was 0.2mmb/d (-2.0%) down WoW to 8.8mmb/d and also around the seasonal average. Gasoline demand has been notably stronger in the second half of the year, averaging 0.5mmb/d above average demand in 1H13.

Crude inventory surprised with a 2.6mmbbl build, compared with market expectations of a 1.0mmbbl stock draw. The rise in crude inventory WoW was due to increased crude imports (up 0.3mmb/d WoW) and the drop in refinery crude throughput. Inventory levels remain comfortable for crude and gasoline but distillate inventory is low on an absolute basis (less so in terms of days forward cover).

Further to President Barack Obama’s address to the UN yesterday, President Hassan Rouhani’s address spelt out Iran’s commitment to an exclusively peaceful nuclear programme and its willingness to ‘remove any and all reasonable concerns’ about that programme. However, Rouhani also reaffirmed Iran’s ‘right to enrichment inside Iran’ as a condition of making progress in negotiations laying bare Iran’s core requirement if talks are to make progress. It remains to be seen whether the US will accept that condition. If it does, the chances of a successful outcome will be transformed, in our view.

Colin Smith, Marc Jacouris
VTB Capital analyst

EIA, US, oil

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