U.S. crude oil refiners are adjusting their production plans for the third quarter, responding to weaker profit margins and a decline in summer fuel demand. Executives from major refining companies have indicated that they will incorporate more maintenance downtime into their forecasts, having operated at an average of 95% capacity earlier this year. This high processing level resulted in ample gasoline stocks, benefiting consumers but adversely affecting profits.
Matthew Blair, a refining analyst at Tudor, Pickering, Holt & Co, noted that refiners are adapting to a challenging margin environment with lower demand projections. He suggested that reducing supply could help improve margins.
Top U.S. refiner Marathon Petroleum plans to operate its 13 refineries at 90% of their combined crude intake capacity of 3 million barrels per day (bpd), a decrease from 97% in the previous quarter. Valero Energy, the second-largest refiner, is also scaling back its processing rates due to maintenance and soft margins, targeting a midpoint of about 2.86 million bpd, down from 3 million bpd last quarter.
Phillips 66, which previously operated at a five-year high of 98% capacity, is now planning to run its facilities in the low-90% range, citing a softening fuels market. PBF Energy’s CEO mentioned that utilization is decreasing across the sector, with anticipated losses in summer utilization.
HF Sinclair expects planned plant overhauls to reduce its run rate by approximately 7.8%, with current operations at 635,000 bpd. The recent U.S. government sale of 1 million barrels of gasoline from the Northeast supply reserve, while beneficial for consumers, has further pressured refiners. Operators are hopeful that maintenance-related supply cuts will gradually enhance margins in the upcoming quarter.