According to the EIA’s Weekly Petroleum Status Report (WPSR), for the week ended Friday, January 16, a drop in implied motor gasoline (mogas) demand contributed to a nearly 6 MMbbl build in total gasoline inventories, lifting total mogas stocks to 257 MMbbl (yellow dashed oval in chart below), the highest level seen since February 2021.
It could be argued that no sector in the energy industry has seen more uncertainty the past three years than refining. In rapid succession, it experienced a historic collapse in demand, a shaky recovery, a run-up in crude oil and other feedstock prices, the disruption in Russian supply, and the wrath of the public and politicians alike when gasoline and diesel prices rocketed higher earlier this year. Prices at the pump may have sagged in recent months, but don’t think for a second that refining has reverted to anything resembling stability and normalcy — refiners still face a host of challenges and unknowns. For starters, what’s ahead for crack spreads, which have been spiking up and down lately? How quickly will electric vehicles (EVs) undermine demand for traditional motor fuels? And what about renewable diesel? New environmental regulations? More refinery closures? In today’s RBN blog, we look at the long list of challenges domestic and international refiners will face through the rest of the 2020s.
Worldwide, refiners expect to add significant capacity over the next five years, mostly in the Middle East and the Asia Pacific region. While only a small amount of crude processing capacity additions are expected in the U.S. and Canada, the capacity additions elsewhere could have major product-trade and utilization effects on U.S. refiners — especially in PADD 1 (East Coast). Today we analyze expected near-term refinery capacity additions, global demand projections, and potential effects in the U.S.
