Since the U.S. Energy Information Administration (EIA) began keeping weekly records in 1990, crude oil input to U.S. refineries has topped 17 million barrels a day just 24 times. Also known as refinery runs, crude input to refineries set a record of 17.7 million barrels a day in the week ending May 26, slipping to 17.5 million barrels the following week and ticking up again to 17.6 million barrels a day last week.

These huge refinery runs are producing refined products like gasoline and diesel fuel faster than the products are being utilized. Because investors and traders typically look at total inventories of crude oil and refined products, the large increases in refined product inventory are keeping pressure on both crude oil and refined product prices.

Refinery utilization — the percentage of total capacity used — did not reach a new record, primarily because U.S. refining capacity has increased over the years. In the week ending May 26, refinery utilization reached 95%, somewhat lower than the record levels reached in the late summer of 2015.

Since mid-August of 2015, U.S. refining capacity has increased by 659,000 barrels per calendar day, according to the EIA. At the end of March 2017, U.S. refining capacity totaled 18.62 million barrels per calendar day with an operating capacity of 18.42 million barrels. The other 200,000 barrels of capacity is idled.

There are three primary outlets for refined petroleum products: commercial inventories; product supplied, the EIA’s proxy for demand; and exports. Commercial inventories currently hold 83 million barrels more than the five-year average of around 800 million barrels, and refined products supplied to resellers are up by about 600,000 barrels a day compared to the five-year average but remain about 400,000 barrels a day less than a year ago at this time. Product exports have risen by about 831,000 barrels a day year over year as well.

Even though crude oil inventories have fallen in nine of the past 10 weeks, total petroleum stocks have remained stubbornly resistant to drawdowns. Analysts at S&P Global Platts expect crude oil stockpiles to fall by 2 million barrels in the week ended June 16. Gasoline stockpiles are expected to fall by 7.5 million barrels and distillate stockpiles are forecast to decline by 250,000 barrels.

But refinery utilization is forecast to rise by 0.3 percentage points to 94.7%. What’s happening is that the drawdown in crude oil inventories is almost entirely a function of increased demand from refiners. And with demand for gasoline from consumers down sharply year over year, refiners’ profits are down to exports.

If there were more tanker loading facilities on the U.S. Gulf coast, the U.S. stockpile of gasoline would drain faster and prices for crude and gasoline would rise. But refiners can be satisfied now with being able to meet export demand (at a premium to domestic pricing) while crude costs are falling. Pure play refiners like Marathon Petroleum, Phillips 66 and Valero, among others, stand to benefit from the current state of the market for petroleum products.

Just before noon Tuesday, crude oil for July delivery traded at $43.01, after setting a new 52-week low of $42.75 earlier in the morning.

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