• 2 minutes CV19: New York 21% infection rate + 40% Existing T-Cell immunity = 61% = Herd Immunity ?
  • 4 minutes Is The Three Gorges Dam on the Brink of Collapse?
  • 7 minutes Sources confirm Trump to sign two new Executive orders.
  • 51 mins COVID is real now
  • 3 hours Is the oil & gas industry on the way out?
  • 20 hours In a Nutshell...
  • 1 day Better Days Are (Not) Coming: Fed Officials Suggest U.S. Recovery May Be Stalling
  • 20 hours Australian renewables zone attracts 27 GW of solar, wind, battery proposals
  • 3 hours The Boris Yeltsin of America
  • 3 days Where is Alberta, Canada headed?
  • 2 hours Why Oil could hit $100
  • 3 days No More Love: Kanye West Breaks With Trump, Claims 2020 Run Is Not A Stunt
  • 3 days Putin Paid Militants to Kill US Troops
  • 4 days A Real Reality Check on "Green Hydrogen"
  • 3 days During March, April, May the states with the highest infections/deaths were NY, NJ, Ma. . . . . Today (June) the three have the best numbers. How ? Herd immunity ?
  • 3 days The Coal Industry May Never Recover From The Pandemic
Oil At A Crossroads As COVID-19 Infections Surge

Oil At A Crossroads As COVID-19 Infections Surge

Soaring U.S. crude inventories and…

An Ugly Week For U.S. Shale

An Ugly Week For U.S. Shale

It was a very rough…

Exxon vs Chevron: Which Is The Smartest Buy?

Exxon vs Chevron: Which Is The Smartest Buy?

Exxon stock has fared worse…

Irina Slav

Irina Slav

Irina is a writer for Oilprice.com with over a decade of experience writing on the oil and gas industry.

More Info

Premium Content

Gasoline Overproduction Leads To Negative Margins

Excess supply of gasoline coupled with slow demand has pressured refiners margins, Reuters reports, noting refining margins for the fuel in the United States sank to US$45.70 a barrel yesterday.

The drop follows the fourth weekly increase in gasoline inventories in the U.S., all of them quite hefty, leading to an all-time high of gasoline supplies, at 259.6 million barrels as of January 18.

Over the last four weeks, the Energy Information Administration reported gasoline inventory builds reaching a combined 26.6 million barrels.

However, the United States is not the only large gasoline hub where inventories are rising as demand remains sluggish. According to the Reuters report, inventories in the Netherlands, Japan, and Singapore are also at multi-year highs, with the annual increase in their combined level at 21 million barrels, data from consultants FGE has shown.

The U.S. shale oil boom has yielded predominantly light crude, from which gasoline is made, so the most recent surge in production has resulted in more production of the light fuel. However, U.S. refiners have also upped their gasoline output levels as they increase distillate fuel production as well, as it fetches higher margins.

“Overproduction of gasoline ensued and now you’re in a situation where in various parts of the world gasoline cracks are basically zero or negative,” Wood Mackenzie analyst Zachary Rogers told Reuters.

Related: Canadian Heavy Crude Producers Find New Ways To Ship Oil

The prospects for gasoline demand don’t seem too bright, either. Worry about a global economic slowdown persist despite reports from Asia that governments are preparing for stimulus measures. Also, Wall Street seems to be unanimous in its expectation of a slowdown during the so-called “late-cycle” stage that precedes a recession.

Things are not much different in Europe: Reuters reports that gasoline margins are dropping there as well, hitting a seven-year low of a negative US$3.80 a barrel this week. Europe’s economy has been struggling with the aftereffects of the 2008 crisis a lot longer than other regions, and success has been only partial.

By Irina Slav for Oilprice.com

More Top Reads From Oilprice.com:


Download The Free Oilprice App Today

Back to homepage





Leave a comment
  • Dan Foster on January 25 2019 said:
    Won't that negatively affect Exxon this quarter?
  • Jeffrey Brown on January 25 2019 said:
    In my opinion, this is more evidence that actual global crude oil production* has been on an "Undulating Plateau" since 2005, while global natural gas production and associated liquids--condensate and natural gas liquids--have so far continued to increase.

    *Generally defined as crude oil with an API gravity of 45 or less, but the maximum API gravity for WTI crude oil is 42 degrees, and the distillate content declines significantly just going from 39 API to 42 API (by two-thirds on a chart I have seen).
  • Mitch Farney on January 25 2019 said:
    Perfect, for the consumers of gasoline. Gonna have to pick up your margins someplace else as gasoline becomes a by product. And as more people switch to electric cars.... low fuel prices will keep people from switching. And over time should put light oil at a discount to heavier grades.

Leave a comment




Oilprice - The No. 1 Source for Oil & Energy News