Earlier this week, the profitability of oil refining in the U.S. reached a 3-month high. It is likely to rise even further, as the refinery downtime affects fuel supplies.
The crack spread, or the difference between the prices of a barrel of crude oil and a barrel of oil products produced from it, hit the level of $42.4 on Tuesday. That is the highest since October 2022. The average level for January over the past five years is about $15.6.
Due to several reasons, the current refinery maintenance season might last much longer than previously. First, PBF Energy's Chalmette refinery suspended its diesel production because of a recent fire. Second, Exxon Mobil's Baytown refinery will be shut down for maintenance. Moreover, many U.S. Gulf Coast plants are still not working at their full capacity due to the consequences of the winter storm in December.
The situation was also affected by the Covid-19 pandemic, due to which a number of overhauls were postponed. They are planned for the spring of 2023, therefore, the amount of repair work at refineries might increase. All these factors combined have a strong impact on fuel supplies. However, U.S. gasoline stocks are already down by about 10%, and diesel stocks are down by about 20%.