There’s enough crude oil in storage to supply refineries for nearly a month straight, the highest level in three decades, according to new government data. The nation’s commercial crude oil inventories have been ballooning since refineries have been shut down for seasonal planned maintenance. The lower refinery runs combined with a record-breaking 458.5 million barrels of crude in storage means that the U.S. has enough oil to feed 29 days of refinery demand, according to the U.S. Energy Information Administration’s projections about refinery runs in March. The U.S. hasn’t seen that many days of supply available since 1985, according to the EIA. With so much crude available and continued strong margins between oil prices and the price of gasoline and other refined products, analysts predict that refineries will run hard once they come back online in the coming weeks.
“They are going to process as much crude and feedstock as they can because the market will really reward them right now,” said Tom Kloza, chief oil analyst at the Oil Price Information Service.
Refinery runs, which are expected to begin increasing again in April and peak in the summer, will help soak up some of the excess crude on the market but it will take months to make a significant dent in the rapidly swelling crude oil inventories. “We need to sustain high crude runs for a period of time before we can start reversing and start drawing down the high crude oil stocks we built up,” said Afolabi Ogunnaike, senior analyst of refining and oil markets at Wood Mackenzie.
Nationwide, refineries are running at 88 percent of capacity, processing about 15.4 million barrels per day, but analysts expect that number to grow to 16.4 or 16.5 million by the peak summer driving season. “We are still expecting this summer to set a new high in terms of how much crude oil being processed by refineries,” Ogunnaike said.