Refiners Cut Oil Output To April Low In Survey

Sept. 9 (Bloomberg) -- U.S. refiners probably cut crude- processing rates to the lowest level since April as they began seasonal maintenance, a Bloomberg News survey showed.

Refineries operated at 86.5 percent of capacity last week, down 0.5 percentage point from a week earlier, according to the median of 14 analyst estimates in the survey. The Energy Department is scheduled to release its weekly supply report at 11 a.m. today in Washington, a day later than usual because of the Labor Day holiday on Sept. 6.

The profit from turning oil into finished products has tumbled 48 percent since May amid a glut of fuel, boosting the incentive to carry out repairs and upgrades. Refiners typically idle units for maintenance in September and October, a time when gasoline use falls and consumption of heating-oil has yet to increase before the peak-demand winter months.

“We’re entering a period of the year where crude oil demand falls because the refiners in the world go into maintenance mode,” Edward Morse, head of commodities research at Credit Suisse Group AG in New York, said in a Sept. 7 interview on Bloomberg Television. “They cut back on their refinery runs by about 3 million barrels a day.”

The profit, or crack spread, from converting three barrels of oil into two of gasoline and one of heating oil was $8.53 today, based on futures prices on the New York Mercantile Exchange. This year’s peak was $16.909 on May 13. The spread has averaged $10.81 since the reformulated gasoline contract started trading in October 2005.

GO HERE to read more.