Diesel, Gasoline Stockpiles Jump on Strong Refinery Runs

U.S. supplies of heating oil and diesel increased by the most since at least 1982 as refineries processed crude at the highest seasonal level in 16 years.

Inventories of distillate jumped by 11.2 million barrels last week, the Energy Information Administration said. Stockpiles of gasoline climbed by 8.12 million. U.S. refineries operated at the highest level for this time of year since 1999 as West Texas Intermediate crude, the U.S. benchmark, traded near the lowest level in more than five years.

“We have huge refinery runs at a time when seasonally demand is weak,” said Amrita Sen, chief analyst at London-based consultants Energy Aspects Ltd. “The last week of the year, you tend to see distillate demand fall off because factories close down for Christmas, etc. The combination of these factors resulted in the builds.”

Distillate inventories increased to 136.9 million barrels in the week ended Jan. 2, the highest level since March 2012, the EIA, the Energy Department’s statistical arm, said in a weekly report. Gasoline supply rose to 237.2 million, the most since 2011.

Inventories of crude oil dropped 3.1 million to 382.4 million barrels. Refineries operated at 93.9 percent of their capacity, down 0.5 percentage point from the previous week. The operating rate in the Gulf Coast, known as PADD 3, climbed 1 percentage point to 95.9 percent.

High Utilization

“Refiners in both the Midwest and the Gulf Coast continue to operate at a very high utilization level,” said Andy Lipow, president of Lipow Oil Associates LLC, an energy consulting firm in Houston. “They are turning the crude oil surplus into a petroleum-product surplus.”

Distillate inventories gained 4.24 million in the Midwest, known as PADD 2, and 3.2 million on the Gulf Coast, EIA data showed.

West Texas Intermediate crude, the U.S. benchmark, ended at $47.93 a barrel yesterday, the lowest level since April 2009. Futures gained 1.1 percent to $48.45 at 11:56 a.m. today on the New York Mercantile Exchange. WTI capped 2014 with the biggest loss since 2008 as strong production and weak demand led to a global glut.

Gasoline futures dropped 1.9 percent to $1.328 a gallon on the Nymex. Ultra low sulfur diesel futures declined 2.1 percent to $1.6898 a gallon.

Regular gasoline averaged $2.191 a gallon at the pump yesterday, the lowest level since May 2009, according to AAA.

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