US residual fuel oil inventories have averaged 7% higher so far this month than in January and continue to linger close to multi-month high levels, data from the Energy Information Administration (EIA) shows.

Changes in monthly average US residual fuel oil from January to February (so far):

• Total US stocks up 2.07 million bbls to 32.75 million bbls
• Gulf Coast stocks up 2.06 million bbls to 20.75 million bbls
• East Coast stocks up 61,000 bbls to 5.81 million bbls
• West Coast stocks down 49,000 bbls to 4.85 million bbls

Total US fuel oil stock levels have grown this month, partly as less fuel oil has been supplied out of storage to outlets like bunker fuel blenders and bulk terminals, to refinery coking units for upgrades to other higher-value products, or to power generation. Supply, or implied demand, has declined to its lowest level in six weeks.

US fuel oil production has declined by 8% on the month. East Coast refineries have produced 34% less fuel oil so far this month, followed by 24% less from Gulf Coast refineries and 9% less from West Coast refineries.

Overall US refinery utilisation has averaged about 88% this month, up from 85% in January. But utilisation is still down from highs of 90% in December and 94% in November.

Maintenances at several US refineries have contributed to cap refinery utilisation. “We forecast domestic refinery maintenance will contribute to reduced refinery utilization in the US through April,” the EIA wrote in a short-term energy outlook this week.

Many US refineries postponed their planned turnarounds last year as low inventory levels and attractive refining margins encouraged them to maximise utilisation. “Although current refining margins remain above normal levels, we expect more refiners will undergo deferred maintenance this season,” the EIA said.

US fuel oil imports have remained roughly steady between January and this month. According to cargo tracker Vortexa, about 81% of US fuel oil imports have arrived on the Gulf Coast, followed by 13% on the West Coast and the remaining 6% on the East Coast.

Changes in monthly US residual fuel oil from January to February (so far):

• Supply down 176,000 b/d to 130,000 b/d
• Production down 23,000 b/d to 259,000 b/d
• Imports down 2,000 b/d to 208,000 b/d

Mexico has been the US’ biggest fuel oil import source this month, a position it has been holding since April last year, when direct Russian imports were fully phased out with an embargo. Fuel oil imports from Mexico have accounted for 32% this month, down from 52% in January.

Iraq has replaced the Bahamas to emerge as the US’ second biggest fuel oil source this month.

The EIA’s fuel oil export figures lag two months behind figures for imports and other data. Going by Vortexa data, US fuel oil exports started dipping from January and into this month.

More than two-thirds of US fuel oil exports have departed for the Caribbean region this month, including the US Virgin Islands, Honduras and Curacao.
Source: ENGINE, By Nithin Chandran, https://engine.online/news-single?postId=17840