REFINERY MARGIN TRACKER: US margins fall as gasoline demand ebbs

Refinery margins across the United States fell for the week ended Jan. 21 as gasoline demand weakened, according to an analysis from S&P Global Platts on Jan. 24, due in part to bad weather which kept drivers off the road.

According to data from GasBuddy, which tracks real-time fuel prices across the US, Canada and Australia, weekly total US gasoline demand fell 6.4% from the prior week and was 6.7% below the four-week rolling average.

"Demand destruction was expected as a larger winter storm boosted last week's demand figure in the closing day of the period and caused a big early week drop in these demand figures," said GasBuddy's Patrick De Haan.

"Overall, total US demand last week was at its lowest since March 2021," he added.

GasBuddy data showed the US Atlantic Coast had the biggest percentage decline in gasoline demand, falling 13.7% week on week.

Demand declines were reflected in lower margins. USAC cracking margins for Urals crude fell over $1 to average $9.01/b for the week ended Jan. 21, compared with $10.20/b the week earlier, according to S&P Global Platts Analytics data.

The lower cost of complying with the Environmental Protection Agency's Renewable Fuel Standard also factored into weaker margins, averaging $3.24/b for the week ended Jan. 21 from $3.68/b the week earlier, Platts Analytics margin data showed.

Rising crude costs also cut into margins, with front-month Brent futures averaging $87.53 week ended Jan. 21 and front-month NYMEX crude futures averaging $85.88/b, the highest levels for both since October 2014.

Global refinery downtime declines

Global refinery utilization is increasing as refinery downtime slows, increasing inventories of refined products. January global refinery downtime is expected to be about 9.3 million b/d, compared with the over 10 million b/d offline in December, according to S&P Global Platts Analytics.

US refinery downtime is also decreasing, with 2.4 million b/d offline in January 2022, down from 2.5 million b/d in December and 5 million b/d in November.

However, with the onset of spring seasonal maintenance, US refinery downtime in February is expected to be 2.7 million b/d and March downtime at 3 million b/d, Platts Analytics forecasts, with the US Gulf Coast bearing the brunt of the planned work.

"The downtime is seen among both independent and integrated refineries such as Holly Frontier, Exxon, Shell, Valero and Marathon," Platts Analytics said in a research note.

Planned work beginning in the week ended Jan. 24 includes the gasoline-making complex at Valero's 195,000 b/d McKee refinery in Sunray, Texas, according to a recent filing with the Texas Commission on Environmental Quality.

According to most recent weekly data from the US Energy Information Administration, USGC refinery utilization declined two percentage points to average 87.7% of capacity for the week ended Jan. 14.

EIA weekly data showed weekly US gasoline inventories, which stood at 246.6 million barrels for the week ended Jan. 14, were at the highest weekly level for almost a year on weaker demand and fewer exports.