Photographer: Andrey Rudakov/Bloomberg
U.S. Refiners Sitting on a Mountain of Partially Processed GunkBy
‘Hodgepodge’ category of unfinished oils near 11-year high
Spring maintenance work is likely culprit for sky-high supply
U.S. stockpiles of “unfinished oils” are sitting at the highest levels since 2007, rising 14 percent this quarter alone. This brings up two questions -- why is this happening? And more importantly, what exactly are unfinished oils?
The Energy Information Administration defines them as such: “All oils requiring further processing, except those requiring only mechanical blending.” Confused? No fear -- the category includes oils “produced by partial refining of crude oil and include naphthas and lighter oils, kerosene and light gas oils, heavy gas oils, and residuum.” Clear as mud.
The build-up of this gunk is a likely result of refinery turnaround season, when some crudes go through only one unit while a secondary one is getting some spring cleaning. It’s nothing for the oil market to worry about, says Mason Hamilton, an analyst at the EIA. “I would expect them to draw in the next few weeks,” he said.