Oil has largely given up…
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Limited storage for refined products has forced BP to cut the refinery rates at its three largest refineries in the United States to 80-85 percent as fuel demand is crumbling amid lockdowns and stay-at-home orders, Reuters reported on Thursday, quoting sources with knowledge of the refinery operations.
Sources told Reuters last week that BP has reduced refinery run rates at its 430,000-bpd refinery in Whiting, Indiana, the 242,000-bpd Cherry Point, Washington, refinery, and the 155,000-bpd in Toledo, Ohio, refinery, due to low demand from U.S. consumers.
Oil majors began to reduce refinery run rates across the U.S. at the end of March when states began to take measures to flatten the curve for the number of coronavirus cases. U.S. oil supermajor ExxonMobil has reduced the run rates at its second-largest refinery in the United States, Baton Rouge in Louisiana, after slumping fuel demand filled storage tanks, sources with knowledge of the operations at the 502,500-bpd refinery told Reuters last month.
Despite the low gasoline prices, demand for fuel in the United States, and across the world, is taking a major hit as people are asked or ordered to stay at home as countries grapple with the spread of the coronavirus pandemic. Oil demand in the United States is set to tumble over the following weeks, as cities are under lockdown, non-essential businesses and services are closed, and people are asked to work from home wherever possible.
Meanwhile, gasoline inventories in the United States continue to climb, along with crude oil inventory builds. During the latest reporting week, to April 3, U.S. oil inventories swelled by 15.2 million barrels, the EIA said on Wednesday, a week after reporting the largest oil inventory build since 2016. The EIA also reported gasoline inventories had increased by 10.5 million barrels and distillate fuel inventories had added 476,000 barrels. This compared with a gasoline inventory increase of 7.5 million barrels for the previous week and a distillate fuel inventory fall of 2.2 million barrels.
By Tsvetana Paraskova for Oilprice.com
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Tsvetana is a writer for Oilprice.com with over a decade of experience writing for news outlets such as iNVEZZ and SeeNews.