A potential lifting of the crude export ban in the US is not likely to be a near-term threat for refiners, according to Fitch Ratings. Despite modifications around the edges, Fitch believes that removal of the ban is not likely to become a concern until after the next election cycle, and, even then, political hurdles stand in the way of its being fully recalled.
Until then, Fitch believes the status-quo is likely to remain intact, continuing the windfall that refiners have seen under recent market dynamics. Despite the decline in crude oil differentials, refiners have benefitted from strong crack spreads and low prices that have stoked US gasoline demand higher. Demand in the second quarter rose 3.8% year to date and currently stands at its highest level since 2010.
Crude inventories remain oversupplied, but should correct gradually as industry CAPEX cuts begin to flow through the system. Higher seasonal refinery utilization has already had an impact on overall US inventory levels, pushing them down approximately 6% from peak levels in April. Refinery utilization will be an issue to watch in the second half of 2015, as the lower refinery utilization typically seen heading into the end of the year may lead US crude inventories to build up once more, all else equal.