LONDON, Aug 13 (Reuters) - U.S. petroleum refiners have

trimmed crude processing rates in response to a rise in fuel

inventories and a decline in refining margins since the start of

the second quarter of 2024.

Refiners' gross inputs of crude and unfinished oils slowed

to 16.6 million barrels per day (b/d) over the seven days ending

on Aug. 2, according to data from the U.S. Energy Information

Administration.

Gross inputs were the slowest for the time of year since the

first wave of the coronavirus pandemic in 2020 and before that

2014.

Refiners utilised just 90.5% of their operable capacity,

down from 93.6% at the same time last year and the lowest rate

since the pandemic's first wave.

Top refiners Marathon, Valero and Phillips 66 have all

announced reductions in processing rates during recent earnings

calls with investors.

MINI BOOM

Processing rates have slowed sharply since the first few

months of the year, when refiners accelerated them to the

highest for almost five years.

Gross inputs climbed to an average of 19.2 million b/d in

May, which was the highest for the time of year since 2019.

Refiners were reacting to a persistent depletion of

gasoline, distillate fuel oil and jet fuel inventories and a

rise in gross refining margins.

The run down in stocks was partly driven by the unplanned

shutdown of BP's refinery at Whiting in Indiana in February and

March following a site-wide electricity failure.

Chartbook: U.S. refining margins and crude processing

Combined stocks of the big three fuels had fallen 18 million

barrels (-4% or -0.76 standard deviations) below the prior

ten-year seasonal average by March.

In response, gross refining margins for producing two

barrels of gasoline and one barrel of distillate fuel oil from

three barrels of U.S. crude climbed to more than $31.

Gross margins or "crack spreads" were in the 75th percentile

for all months since 2010, after adjusting for inflation.

RETREAT

Since April, however, fuel inventories have been climbing

and spreads narrowing in response to the increased amount of

refining activity.

By July, combined fuel stocks were just 7 million barrels

(-2% or -0.26 standard deviations) below the ten-year average.

Inventories have continued trending upward. Stocks of both

gasoline and distillate fuel oil had climbed to the highest for

three years in the first week of August.

Unsurprisingly, gross refining margins have retreated to

around $24 per barrel, exactly in line with the long-term

inflation-adjusted average.

Refiners have been forced to dial down processing rates to

forestall any further accumulation of inventories and erosion in

margins.

SOFTER PRICES

The unusual slowdown in crude intake since the start of

July, a time when it would normally be rising to meet peak

summer driving demand, has contributed to the softness in crude

prices and spreads over the same period.

U.S. crude futures prices for deliveries in September have

retreated from almost $83 per barrel near the start of July to a

low of just $73 in early August before recovering to just under

$80.

Some of this has been driven by broader concerns about the

outlook for the global economy, which have hit multiple

commodities and asset classes.

But the sudden slowdown in refinery crude consumption at a

time of year when it is normally strongest has been an

additional headwind for oil prices.

It also underscores the risks if OPEC+ proceeds with its

previously announced but provisional plan to increase crude

production from the start of October.

Related columns:

- U.S. refining margins slump as fuel stocks climb (June 13,

2024)

- Investors abandon bullish case for U.S. gasoline(May 15,

2024)

- Renewable fuels take bite out of U.S. diesel

consumption(May 10, 2024)

(Editing by Kirsten Donovan)