Refiners to Tackle Maintenance Needs
February 3, 2023
The energy markets have not been able to find buyers just yet as prices continue to be soft and are testing lower levels. The government has said they will buy crude oil at $70 to fill the SPR so that would appear to be the bottom of the range for now and crude oil may settle into a range as it tries to find value. The $70 dollar level is still roughly six dollars away so there is room from more downside and at some point, this level will likely be tested.
Genscape reported that crude oil stocks held in Cushing, OK in the week Tuesday, January 31 increased by 2,004,658 barrels on the week and by 1,139,986 barrels from Friday, January 27 to 42,0107,195 barrels.
Refineries last year were running at very high levels to try and pump out products to replenish low supplies. Crack spreads also got higher and gave them more incentives to run hard and make money. But this can only continue for so long before maintenance in need and here in the first quarter of 2023 their appears to be a lot of maintenance looking to get done. “We are expecting a pretty hefty spring turnaround season in 2023 after refiners ran hard in 2022,” said Matthew Blair, refining analyst at research firm Tudor, Pickering, Holt & Co. In a Reuters report the claims that US refiners are looking to operate between 85% and 89% of capacity, according to company outlook and analysts’ estimates. The planned maintenance in the first quarter will affect the highest level of refining capacity in five years, analysts told Reuters.
The US non farms payroll number was up big at 517,000 news jobs added in January. This is well above the 188,000 expected and the 223,000 added the month prior. Unemployment also fell to 3.4%, the lowest rate in more than 53 years.