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Following record utilization last year, U.S. refiners expect to have lower capacity operating in the first quarter of this year, due to a heavy maintenance season.
After operating at over 90% for most of 2022, the largest U.S. refiners now see their first-quarter utilization below 90%, and analysts expect refinery capacity utilization to be between 85% and 89% at the beginning of 2023, Reuters notes.
The planned maintenance in the first quarter will affect the highest level of refining capacity in five years, analysts told Reuters.
Marathon Petroleum, the biggest U.S. refiner, said on its 2022 earnings call this week that it sees its first-quarter crude throughput volumes at around 2.5 million barrels per day (bpd), which would be 88% capacity utilization. Marathon Petroleum expects lower utilization in the first quarter compared to
96% in 2022 and 94% in the fourth quarter, due to the impact of refinery turnaround in its U.S. Gulf Coast assets.
Phillips 66, for its part, said that crude utilization was 91% in the fourth quarter, but it expects Q1 2023 capacity utilization to be in the mid-80%.
“We are heavy centric first quarter on our turnaround,” Phillips 66 president and CEO Mark Lashier said on the earnings call this week.
In the week to January 27, U.S. refineries operated at 85.7% of their operable capacity, down from 87.7% in the same week last year, the Energy Information Administration said in its latest weekly petroleum status report.
Refiners plan longer maintenance periods early this year after foregoing or doing just basic maintenance at refineries for a few seasons. First, it was COVID that prevented workers from being sent to refineries for maintenance. Then it was the rebound in demand – especially in 2022 – during which refineries ran at near capacity to meet consumption. So this refinery maintenance season is expected to be longer and to involve a higher number of refineries across the U.S., temporarily driving operational capacity lower and potentially fuel prices higher.
By Tsvetana Paraskova for Oilprice.com
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Tsvetana is a writer for Oilprice.com with over a decade of experience writing for news outlets such as iNVEZZ and SeeNews.