U.S. Refinery Production Rising Faster than Demand

After weathering more than a year of plummeting demand due to a global pandemic, a massive Gulf Coast freeze, the temporary shutdown of the Colonial pipeline, and weeks of spring rains, U.S. refiners have begun ramping up production of gasoline for the summer driving season. In the week ended June 4, refinery runs jumped to the highest since February 2020. Capacity utilization climbed four weeks in a row, reaching 91.3%, the most since January 2020.

Yet, despite road traffic being largely back to levels seen before the pandemic, supply is currently outpacing demand. 

Furthermore, running harder after more than a year of cuts and postponing maintenance may be contributing to a rash of unit malfunctions from California to Texas. Just last week, Valero Energy Corp. experienced fires at two of its Texas plants, Three Rivers and Port Arthur.