US gasoline inventories dropped to their lowest seasonal level in a decade, reaching just 215.1 million barrels in the first week of June. This significant decline occurs as American vacationers enter the peak summer driving season. Robust domestic demand and increasing fuel exports are straining thin inventories, which will likely send pump prices climbing.
The current supply crunch stems from US refiners prioritizing diesel and jet fuel production. This strategy aims to backfill global shortages caused by shipping disruptions in the Strait of Hormuz. This critical passageway handles nearly a fifth of global oil flows and has been effectively closed since the start of the Iran war.
Ghana's energy market, while not directly impacted by US domestic supply issues, is sensitive to global oil price fluctuations. Increased demand and production shifts in major oil-producing nations, like the US, can influence global crude prices. These prices directly affect the cost of petroleum products imported into Ghana. Higher international crude prices can lead to increased fuel costs at the pump for Ghanaian consumers and businesses. This impacts transportation costs and general inflation within the Ghanaian economy.
Sumit Ritolia, a lead analyst for refining supply and modeling at Kpler, stated, "Balances will definitely be severely tight because (refining margins) incentives still support jet fuel." He added that Middle Eastern refiners are not expected to increase supply quickly. This outlook suggests continued pressure on global fuel markets.
Consumers and businesses in Ghana should monitor global oil price trends. Any sustained increase in international oil prices due to these supply constraints could necessitate adjustments in fuel subsidies or retail pricing. Decision-makers in Ghana's energy sector will closely watch these developments to manage domestic fuel supply and pricing. The US summer driving season traditionally runs until early September, meaning the tight supply could persist for several months.
Analysts warn that a supply deficit is looming as US gasoline demand has remained strong. Pump prices have already surged roughly 40% since the Iran war started. Prices are now hovering above $4 per gallon. Experts also worry that US refineries may not be able to maintain near-capacity operations. They note more unplanned outages than expected lately.
The comfortable US gasoline supply cushion built during low-demand winter months evaporated by the end of May. This was when the summer driving season kicked off during the three-day Memorial Day holiday weekend. Even more depleted, distillate fuel oil inventories fell to a 23-year low in May. This leaves the supply highly vulnerable to any further sudden shocks.
With domestic gasoline demand holding up despite high pump prices and strong exports, analysts project total demand for US-produced fuel could reach 9.5 million barrels per day (bpd) this summer. This demand would outstrip the 9.2 million bpd that fuel makers can currently produce. US refiners ran their facilities at 95.3% of capacity in the first week of June, their highest in nearly a year.
The US exported 54.65 million barrels of diesel and jet fuel in May, the highest in Kpler data going back to 2017. The country also exported 22.52 million barrels of gasoline in May, up from 20.10 million barrels in April. Tamas Varga, an analyst at PVM Oil Associates, noted, "This has left gasoline as the neglected stepchild of the refinery slate."
Historically, the US could rely on European imports to ease regional gasoline deficits. This fallback option is now difficult and less economical. Europe's fuel supplies are also tight, and freight rates are soaring due to the blockage of the Strait of Hormuz. Tom Kloza, chief energy adviser to Gulf Oil, suggests gasoline inventories could drop by 2 or 3 million barrels per week during the summer crunch time. This could happen even if export rates remain constant.
Raul Calzada, a refining analyst at Energy Aspects, said planned maintenance is being postponed or scaled down. He warned that deferring maintenance could lead to future problems. April recorded the highest average unplanned US refinery outages in five years. Roughly 483,000 barrels per day of crude oil processing capacity were offline, according to IIR Energy data.