MOSCOW (MRC) -- U.S. oil refiners are starting to make progress towards eliminating excess stocks of middle distillates by restraining crude processing and switching equipment to maximize gasoline production, said Hydrocarbonprocessing.
U.S. distillate fuel oil inventories stood at 176 MM barrels at the end of last week, which was 37 million barrels or 21% above the five-year seasonal average. In absolute terms, stocks are unchanged from early June, when they were also 176 MM barrels. But the surplus over the five-year average has shrunk from 42 MM barrels, or 29%.
Refiners have stabilized bloated distillate stocks over the summer and into early autumn, a time when they would normally be rising, accumulated as a by-product of driving-season gasoline production plans.
Refinery processes and equipment have been reconfigured to maximize production of gasoline and minimize output of mid-distillates such as fuel oil and jet kerosene. Last week, refiners produced 1.77 times as much gasoline as distillate fuel oil and jet fuel combined, one of the highest gasoline ratios for a quarter of a century.
Gasoline-distillate ratios have only approached similar levels a few times, including 2010, 2005 and 1998, when distillate stocks were also far above normal. Even more importantly, refiners have trimmed total crude processing to reduce the production and supply of all fuels (in effect cutting everything to bring distillate stocks under control).
U.S. refiners held crude processing 16% below the five-year average last week and by the same proportion over the last four weeks as a whole. By comparison, the total volume of petroleum products supplied to the domestic market, a proxy for actual consumption, was 10% below the five-year average last week and 13% below average for the last four weeks.
The result is that distillate production has been reduced in line with consumption, while gasoline has been under-supplied for months, leading to a sustained drawdown in stocks. Gasoline stocks have fallen by 36 million barrels since late April, when they were 12% above the five-year average, and are now less than 1% above average.
Ethylene and propylene are feedstocks for producing polyethylene (PE) and polypropylene (PP).
According to MRC's ScanPlast report, Russia's overall PE production totalled 1,712,400 tonnes in the first seven months of 2020, up by 58% year on year. Linear low density polyethylene (LLDPE) accounted for the greatest increase in the output. At the same time, overall PP production in Russia increased in January-July 2020 by 24% year on year to 1,063,700 tonne. ZapSibNeftekhim accounted for the main increase in the output.
MRC