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US Crude Refiners To Run Hard In Q3

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US crude oil refineries plan to keep running near full throttle this quarter, according to executives and estimates, as refiners set aside worries about recession and sliding retail prices to deliver more fuel.

The operating levels will keep US gasoline prices below their spring highs while providing strong earnings to refiners, analysts said. Many aim to run at rates similar to the second quarter’s 94 percent average utilization rate.

Matthew Blair, Tudor, Pickering, Holt & co refining analyst, said that “Refiners will continue to run hard in Q3.” He added that he would not be surprised “if Q3 runs weren’t higher” than June given past conservative forecasts.

Mr Blair said: “We are currently barely above the five-year average and still well below the five-year high.”

The largest refiner by capacity, Marathon Petroleum Corp, aims to run at 97 percent of its 2.9 MM barrels per date capacity, with overhauls slightly trimming output. Its 13 plants ran at a 100 percent average rate last quarter.

Valero Energy Corp, the second largest by capacity, expects to drive its 2.2 MMbpd system at 90 percent to 93 percent of capacity, down slightly from the second quarter’s red-hot 94 percent.

Gary Simmons, Valero executive vice president, said on a call with investors that “There is really no indication of any demand destruction”, explaining the decision to maintain high rates.

Chevron Corp said it does not disclose refinery operating targets.

Julie King, ExxonMobil spokesperson, said the company’s US Gulf Coast refineries operated at maximum utilization in the second quarter of this year but declined to provide guidance about plans for future production.

Citgo Petroleum, which ran its three US refineries at 101 percent of their combined 769,000 bpd capacity last quarter, said it does not issue forward-looking guidance.

Historically, US production peaks in the second or third quarter as the summer driving season winds down and companies begin autumn equipment overhauls.

In 2022 US refineries have run at record levels due to plant closings, the quick recovery of domestic demand and strong export demand over Russia’s invasion of Ukraine. Low US stocks of gasoline and diesel have raised fears of diesel shortfalls as the winter heating season draws more distillates.

US gasoline stocks were at nearly 24 days of supply in the week beginning August 15, compared with the pandemic peak of 487 days in 2020. Inventories of diesel were 29.4 days, compared with the peak 54.3 days in 2020, according to government data.

Third-quarter targets do not incorporate any impact from the Atlantic hurricane season, now moving toward its peak activity period. Plants along the US Gulf Coast have more than 47 percent of the nation’s refining capacity and are most at risk of storm disruptions. Scheduled maintenance typically begins in the third quarter.

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