Surging U.S. gasoline production and tepid demand early into the driving season have boosted American gasoline stocks in recent weeks, weighing on refining margins and oil market sentiment. Weaker gasoline demand compared to last year, a well-supplied market with refineries boosting output after spring maintenance, and the recent slide in oil prices have helped lower U.S. gasoline prices at the start of the summer driving season. This is good news for American consumers and the sitting U.S.
But with refiners cranking up fuel output amid weaker demand, gasoline stocks have been rising in the U.S. over the past weeks, weighing on refiners’ profits for producing a barrel of gasoline. Refinery utilization was at 95% in the week to June 7, compared to 93.7% at this time last year, and the highest seasonal since before COVID. If demand was strong, this high rate of U.S. capacity in operation would be warranted. But demand is not strong—it’s weaker than last year.
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