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EIA: US oil refinery runs to continue to set records

Growing refinery capacity and high refined product demand has enabled U.S. refinery runs to reach record levels, according to the U.S. Energy Information Administration, which expects the trend to continue over the next couple of years.

For the first time on record, the four-week average of U.S. gross refinery inputs surpassed 18 million barrels per day, according to an Aug. 13 "Today in Energy" blog post by the government agency.

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The EIA said operators in the Gulf Coast and Midwest regions drove record-high refinery runs, where most U.S. refining capacity is located.

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During the second quarter, refiners in those regions benefited from improved margins, driven by widening domestic crude oil discounts and increased gasoline and distillate prices, with Phillips 66 running its facilities at 100% utilization.

While the government agency says that robust global demand for gasoline and distillate demand is driving refineries to run at record levels, refinery utilization as a percentage of capacity has not surpassed the record set in 1998, as U.S. refinery capacity has increased by 862,000 barrels per calendar day between Jan. 1, 2011, and Jan. 1, 2018.

While not all U.S. refiners were able to ride the industry's tailwinds to the same extent, industry executives have been positive about the sector's outlook.

The EIA echoed those sentiments in its projections.

The peak in the four-week average of finished motor-gasoline product supplied, a proxy for U.S. consumption, is likely to match the record 9.8 MMbbl/d reached in 2016 and 2017, the EIA said.

The EIA said domestic distillate consumption remains relatively strong, averaging 4.0 MMbbl/d over the last four weeks, or 64,000 bbl/d lower than the five-year average, with U.S. distillate exports adding another 1.2 MMbbl/d to total consumption.

In its most recent "Short-Term Energy Outlook," the EIA forecast average annual refinery runs would set new records in 2018 and 2019 of 16.9 MMbbl/d and 17.0 MMbbl/d, respectively, surpassing the 2017 record of 16.6 MMbbl/d.