Gas Trade Turns the Tables

Second, inventories of motor gasoline are relatively low for this time of year. U.S. refineries usually ramp up their production of gasoline during March and April ahead of the summer driving season. However, gasoline inventories are 4.4% lower than they were the same time last year.

One reason inventories are so low is that weekly draws have been larger than expected this spring. During the first three weeks of March, analysts were expecting 6.4 million barrels' worth of draws. Instead there was a 10.1-million-barrel drawdown -- 58% more than expected.

The higher demand for gasoline and larger-than-expected inventory draws are all arriving in a year when North America's refinery system is being plagued by shut-ins and geopolitical turmoil.

A major fire in February at Valero's refinery in Sunray, Texas, closed the 170,000-barrel-a-day plant through at least April 1. A fire at Imperial Oil's (IMO Quote) Nanticoke refinery in Ontario seized up a portion of that 118,000-barrel-a-day refinery.

Also last month, a leak shut down a 240,000-barrel-a-day Teppco (TPP Quote) pipeline running from Indiana to Ohio for a few days. Meanwhile, hostage-taking by rebel groups in Nigeria's vast oil fields is reducing that country's exports to the U.S.

The EIA reported last week that U.S. refineries are operating at just over 85% utilization, abnormally low for a period when refineries are supposed to be building their gasoline stores. Although most refineries go through maintenance during the early spring, utilization is usually around 90% for this time in March.