U.S. gasoline production increased to a record last week as demand grew and the profit to process oil into the fuel rose.
Output jumped 11 percent from the previous week to 9.84 million barrels a day in the seven days ended June 13, the highest level since Energy Information Administration data started in 1982. Demand jumped 7.4 percent in the same period. The crack spread, the profit for refineries to process crude and sell gasoline, surged to the highest since April.
“It’s the summer driving season and demand is going to be rising over the next few months,” said James Williams, an economist at WTRG Economics, an energy-research firm in London, Arkansas. “The margins are high.”
Gasoline production is up 18 percent from this year’s low of 8.33 million on Jan. 10. The weekly data are adjusted to include blending of fuel ethanol and gasoline blending components.
Gasoline futures climbed for a third day, adding 0.2 percent to $3.0982 a gallon on the New York Mercantile Exchange. Crude oil futures dropped 0.4 percent to $105.97. The gasoline crack rose to $24.15 a barrel based on front-month futures, the highest since April 30, according to data compiled by Bloomberg.
Demand for the fuel increased 634,000 barrels a day last week to 9.26 million, the EIA, the Energy Department’s statistical arm, said. The summer driving season traditionally starts on Memorial Day in late May and ends in early September on Labor Day.
Regular gasoline prices at the pump averaged $3.669 a gallon yesterday, up for a seventh day, according to AAA, the largest U.S. motoring company.
Production rose last week even as refineries reduced their utilization rate to 87.1 percent from 87.9 percent. Ethanol used in gasoline blending increased 22,000 barrels a day to 891,000 barrels, the highest since May 23.
“The refinery rate is down and gasoline production is up, and that’s because it includes ethanol blending,” Williams said.
Refineries processed 15.4 million barrels a day of crude last week, down 1 percent from the previous week, the EIA said. In the Midwest area, known as PADD 2, they used a record 3.71 million barrels. Crude rates there have been at the highest-ever seasonal levels since April, according to the agency.
BP Plc’s Whiting refinery in Indiana installed a 102,000 barrel-a-day coker in November to increase the plant’s ability to run heavy, sour Canadian crudes. The company said March 6 that Whiting’s heavy oil throughput would reach 280,000 barrels a day in the second quarter.