U.S. crude inventories increased by just more than 2 million barrels last week to 500.8 million barrels during the week ended March 12, up from 498.4 million barrels the previous week, the Energy Department said Wednesday. The increase pushed the price of West Texas Intermediate, the U.S. benchmark, under $64 Wednesday morning before it settled at $64.60, down 20 cents.
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The boost in inventories follows several weeks during which Gulf Coast refineries were restarting operations after February's arctic blast. The winter storm knocked out 18 of 30 Texas refineries, according to industry trade publications, and reduced crude processing by almost 5 million barrels a day. The state's refineries account for about 30 percent of the nation's capacity.
Among the refineries that have not restarted in full are Shell Deer Park and Chevron Pasadena.
“On the heels of unprecedented recent weather events, we continue to make progress in the effort to restart select units at Shell Deer Park,” Curtis Smith, Shell media manager for the U.S. and Brazil said in an email Tuesday. “Those specific units will not be identified nor is there a timeline for a full restart of the facility.”
At Chevron’s Pasadena Refinery, workers are inspecting and repairing damage caused by several days of temperatures well below freezing, the company said. “Based on our inspection and repair work, we have begun to restart units following safe startup procedures,” Chevron said in a statement.
Repairing and restarting refineries is complex and requires an assessment of the many operating units, pipes and tanks that make up a facility, according to Susan Grissom, chief industry analyst at the American Fuel and Petrochemical Manufacturers.
“A majority of the facilities that were affected by the unprecedented cold temperatures are resuming operations, carefully and deliberately, and the supply chain for gasoline, diesel, jet fuel and other refined products is getting back to normal,” Grissom said.
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The storm-related shutdowns last month came as the industry was continuing to ramp up almost a year after the coronavirus pandemic forced them to slash the amount of crude they took in and the distillates they produced. Lockdowns during the pandemic decimated demand for crude products, especially gasoline and jet fuel.
Some relief will come as states lift restrictions amid the vaccine rollout and a significant decline in the number of new coronavirus cases.
Texas, among other states, has lifted its mask mandate and removed curbs on the number of people allowed in businesses and public spaces.
Meanwhile, vehicle traffic in the U.S. is back to almost 90 percent of normal levels, up from about 85 percent last week, Rystad said citing data from a real-time tracking system.
States are reopening just as the summer driving season is set to begin, which will be a boon to Gulf Coast refineries looking to sell more gasoline. Refiners are set to begin production of summer-blend gasoline that helps reduce emissions during the warm summer months. The summer blend, which must be at the pump by June 1, could further raise gasoline prices by 5 to 15 cents, according to fuel price tracking website GasBuddy. This follows weeks of rising gas prices that have pushed the national average to $2.86 per gallon and the price in Houston to $2.55, GasBuddy said.
Gasoline inventories increased by 500,000 barrels last week, but they remain 4 percent below the five year average for this time of year in a sign that demand continues to rise.
Jet fuel stockpiles fell by 1.4 million barrels last week, as the nation's airline industry appears to show signs of recovery. Nearly 1.4 million passengers boarded airliners on Friday, according to the Transportation Security Administration, the largest number since March 15, 2020. The number of daily airline passengers had dipped to fewer than 100,000 in April 2020.
With the rise in inventory, the country has about 6 percent more crude on hand than the five-year average for this time of year, the Energy Information Administration said. Stockpiles should decline, however, as demand for crude rises by 1.5 million barrels per day by the end of the year, Rystad said. U.S. demand is about 2 million barrels per day less than during 2019, the research firm said.
Refineries took in an average of 13.4 million barrels a day last week, some 1.1 million barrels per day more than the previous period, the EIA said. The increase had refineries operating at about 76.1 percent of capacity. Over the past four weeks, refineries have produced 8.1 million barrels a day of gasoline, about 13 percent less than during the same period last year.