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United States refiners hold output at high levels as fuel inventories sag

U.S. oil refiners this quarter anticipate to run their plants at above 90% of their crude processing capability on low inventories and enhancing demand for gasoline and diesel, executives and industry experts stated.

Run rates in the year's last quarter tend to cool after the end of the U.S. summertime driving season. But weaker than normal fuel stocks are motivating high run rates even in the middle of weaker revenue margins, analysts stated.

Leading refiners laid out strategies to run their networks at between 90% and 94% of capability through completion of the year, executives stated during profits calls in current weeks. That variety is somewhat above the year-ago level.

This is a bit less of a seasonal decrease than we have seen in previous years, said Matthew Blair, chief refining analyst at monetary company Tudor Pickering Holt. In spite of lower gasoline margins, U.S. refineries are typically still cash-positive. In addition, product stocks are reasonably low.

Refiners' operating margins fell this year as brand-new refineries in Asia, Africa and the Middle East came online, improving worldwide materials as need growth weakened.

Top U.S. refiner Marathon Petroleum, which runs 16% of the country's 18.4 million-barrel-per-day processing capacity, prepares to operate its 13 refineries at 90% of their integrated capacity, similar to a year back.

The international macro environment continues to exhibit refined product need growth, said Marathon CEO Maryann Mannen.

HIGH RUNS, LESS UPKEEP

The second biggest independent refiner, Valero Energy , anticipates to run at approximately 94%, executives said, after its refining profit tumbled in the third quarter. CVR Energy also will increase its run rate in spite of dramatically lower third-quarter earnings.

Phillips 66 intend on running at a combined operating rate in the low-to-mid 90s portion range, executives said. Smaller refiners Par Pacific and HF Sinclair both strategy to decrease their run rates this quarter.

But for all U.S. refiners, the upper end of the variety is very strong, said Kpler lead Americas oil expert Matt Smith. It continues the pattern we saw in the 2nd half of this year with high runs and shallow maintenance levels.

If you're still earning money on the incremental barrel, if the margin is still above the operating cost, you're going to do it, said expert John Auers, managing director of consultancy Improved Fuels Analytics.

(source: Reuters)