Inventory data published by the EIA yesterday aligned with the market’s expectation on direction but differed widely on size. Markets expected crude inventories to fall while product inventories rose, which was the case. However, the crude draw was nearly double the projected amount, and both diesel and gasoline inventories rose far more than expected. Although such hefty fuel builds would typically cause prices to fall, the market focused instead on falling crude stocks and pushed prices higher.
Refinery utilization finally cleared the 90% utilization threshold, hitting 91.3% for the past week. For the first time since January 2020, US refiners are using more than 90% of their total processing capacity to pump out gasoline, diesel, and other refined products. Dampened demand caused them to cut output, so rising levels suggest refiners are growing confident in the state of consumer demand.
Wednesday brought news that the anticipated Keystone XL project had finally be canceled. This new pipeline would have carried vast amounts of refined products from Canada to Nebraska. The project had long been halted due to environmental battles and the failed support from President Biden. While the project had large support from former President Trump, the Biden Administration made it clear from the first day in office that they would not support the pipeline project. Following the announcement of the termination of the project, activists around the country are now urging President Biden to consider revoking permits that President Trump approved for the Enbridge Line 3 pipeline that could carry oil from Canada across Minnesota.