US fuel oil production increased in August, with output rising 13% on average per day compared with July, according to the Energy Information Administration (EIA).

The month-on-month changes in US residual fuel oil from July to August were as follows:

• Production up 39,000 b/d to 343,000 b/d
• Supply down 36,000 b/d to 277,000 b/d
• Imports down 29,000 b/d to 127,000 b/d

Volumes of fuel oil supplied out of US storage tanks declined in August. The fuel oil is directed to outlets such as bunker fuel blenders and bulk terminals, refinery coking units for upgrading into higher-value products, or power generation.

Residual fuel oil is the heavier leftover product of the refining process, and its consumption patterns are closely watched as an indicator of refinery upgrading activity and shipping fuel demand. With production rising while supply — which can also serve as an indicator of demand — fell from 313,000 b/d in July to 277,000 b/d in August, the divergence between output and offtake points to weaker pull from these downstream outlets during the month. US refineries produced 39,000 b/d more fuel oil in August, while imports decreased by 29,000 b/d.

Total US fuel oil stocks rose by 601,000 bbls over the month, reaching 21.98 million bbls, a build consistent with the combination of higher production and lower supplied volumes.

Source: By Gautamee Hazarika, ENGINE,