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U.S. refiners are set to continue operating at high utilization levels in the third quarter, despite concerns that a slowdown in demand could be looming in case of a recession, executives and analysts told Reuters on Thursday.
Refiners operated at near capacity in the second quarter as demand was robust and refining margins were at multi-year highs. This quarter, despite a decline in margins, refiners aim to continue running facilities at close to capacity.
The four-week average refinery utilization at U.S. refineries was at 92.7 percent in the week to August 12, up from 91.6 percent in the same weeks of 2021, the EIA's weekly inventory report showed on Wednesday. Utilization rates in the Gulf Coast were nearly 97% in recent weeks, while refiners on the East Coast operated at above 98% utilization rate, according to the EIA data.
The biggest refiners, including Marathon Petroleum and Valero Energy, plan for high utilization rates, albeit slightly lower from the second quarter, according to executives who spoke to Reuters.
American refiners and oil and gas operators expect strong demand for fuels and energy through the remainder of the year, despite analyst concerns in recent weeks that demand could take a hit with a possible recession or demand destruction. U.S. refiners said during earnings calls in July that there was no indication across their channels that America's fuel demand was weakening.
"During the second quarter, in order to meet robust customer demand, we ran our refining system at full utilization," Marathon Petroleum's CEO Mike Hennigan said on the earnings call in early August.
"Refining ran at 100% utilization processing approximately 2.9 million barrels of crude per day at our 13 refineries safely and reliably. This is the same level of throughput achieved back in 2019 pre-pandemic before the closures of Gallup and Martinez," Hennigan added.
This quarter, Marathon Petroleum plans to run refineries at 97%, according to Reuters, due to some turnaround activities.
Valero, whose utilization was at 94% in Q2, expects to run at 90% to 93% of capacity.
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.