Friday 29 Mar 2024
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KUALA LUMPUR (Aug 29): US President Joe Biden's administration is pressuring US refiners to rebuild inventories of gasoline and diesel, as the production-disrupting Atlantic hurricane season heats up, rather than increasing record high volumes of product exports.

Global energy and commodity market business intelligence provider Argus Media in a report last Friday (Aug 26) said that US energy secretary Jennifer Granholm, in a letter sent to seven major refiners on Aug 18, said historically low inventories of gasoline and diesel posed "heightened risks" to supply ahead of the approaching peak of the hurricane season.

It quoted Granholm as saying the US had already put two million barrels of emergency product reserves on standby, but the most effective response is for refiners to use this "critical window" of time to prioritise building inventories, particularly on the US east coast where inventories are low.

"Given the historic levels of US refined product exports, I again urge you to focus in the near term on building inventories in the US, rather than selling down current stocks and further increasing exports," Granholm wrote.

Argus said US exports of gasoline, diesel and other petroleum products hit a record four-week average of nearly 6.4 million barrels per day in the week ended Aug 19, an increase of more than one million barrels per day from a year ago, citing the US Energy Information Administration.

It said Latin American in particular had been a major source of demand for US products. US gasoline inventories fell to 215.6 million barrels that same week, the lowest since 2015, while US diesel inventories of 111.6 million barrels are 25% below five-year averages.

In the letter, Granholm said in addition to the emergency reserves, the federal government was meeting with governors to prepare for supply disruptions, but that companies to date have not been making "sufficient progress" in rebuilding inventories before the peak of the hurricane season.

"It is our hope that companies will proactively address this need.

"If that is not the case, the administration will need to consider additional federal requirements and other emergency measures," said Granholm.

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