U.S. Refineries Run Near Full Blast, but Crude Stockpiles Hit Lowest Since 2018

U.S. refiners processed 17 million barrels of crude oil a day last week. That's the highest weekly average since September 2019, according to Energy Information Administration data reported by Bloomberg News. Midwest refineries hit a record for the region.

Refiners are running as hard as they can, yet it's still not enough to offset broader market pressures.

Commercial crude stockpiles fell by more than 7 million barrels last week to their lowest level since 2018, per the EIA. Stockpiles at Cushing, Oklahoma, the country's main commercial storage hub, sit below 20 million barrels. Traders consider that the operational minimum, according to Bloomberg.

Matt Smith, director of commodity research at Kpler, says refiners are chasing "supersized" profit margins by running flat out, which is pulling crude out of storage faster than it's coming back in.

Refining at full capacity isn't lowering prices

More refining doesn't automatically mean lower prices if demand outside the U.S. is absorbing the extra output.

Russia has banned gasoline exports through the end of the year and is weighing another month on its diesel export ban, according to Bloomberg, after Ukrainian drone strikes hit Russian refineries. That's knocked a major supplier out of the global fuel market.

At the same time, shipping through the Strait of Hormuz remains uncertain because of tensions tied to the Iran war, Bloomberg reported. Countries in Europe and South America are scrambling for fuel and buying more from American refiners, which is pushing U.S. exports higher and slowing the domestic inventory rebuild even with refineries running near record rates.

Diesel profit margins in the U.S. are sitting near record highs. Gasoline and diesel futures are climbing. Bloomberg's reporting points to $4-a-gallon gasoline as the near-term reality drivers are facing, with no fast relief in sight.

The crack spread tells the same story

The 3-2-1 crack spread, the standard measure of how much profit refiners make turning crude into gasoline and diesel, hit roughly $70 a barrel, according to Crypto Briefing. That's higher than anything seen during the 2022 energy crisis.

Crypto Briefing's reporting ties that record margin to a specific supply-side fact: U.S. refining capacity has actually shrunk by about 1%, down to 18.2 million barrels per calendar day. Fewer refineries running against strong demand is a textbook setup for wider margins, and it's exactly what's happening.

Crude oil stocks have fallen to an eight-year low by that account, while gasoline inventories have also declined. Less capacity, tighter storage, stronger demand. That combination is what's producing record refiner profits at the same time drivers are staring down higher pump prices.

Jet fuel is telling a different, quieter story

While gasoline and diesel markets are stretched thin, jet fuel is actually cooling off. Domestic jet fuel demand fell by 318,000 barrels a day to 1.828 million barrels a day for the week ended in late July, according to EIA data reported by OPIS, a Dow Jones-owned news service. Production dropped too, down 70,000 barrels a day to 2.065 million barrels a day, the lowest pace since mid-May.

Jet fuel stockpiles fell by 572,000 barrels to 46.815 million barrels, the lowest since mid-June, per the same EIA data. But nationally, stocks remain more than 3.4 million barrels above where they sat a year ago. That's a meaningfully different inventory picture than crude or gasoline, where cushions are thinning fast.

Regionally it's a mixed bag. Gulf Coast jet fuel stocks dropped sharply, down 1.449 million barrels to their lowest since late May, though they're still over 1.2 million barrels above year-ago levels. East Coast stocks actually hit their deepest level since August 2024, up 1.421 million barrels.

What happens next

Refiners may struggle to keep running at near-record rates without further draining crude stockpiles that are already at their lowest point since 2018. Cushing inventories sitting near the operational floor leaves little room for error if another supply shock hits, whether from further Russian export bans, additional strikes on refineries, or a disruption in the Strait of Hormuz.

The premium for near-term crude delivery over later months widened further on July 29, according to Bloomberg, a signal that traders are pricing in continued near-term supply tightness rather than expecting a quick fix. Nothing in the EIA data or refiner activity so far points to that easing before U.S. drivers get through the rest of the summer driving season.