By Stephanie Kelly
NEW YORK, Dec 30 (Reuters) - U.S. gasoline prices hit a
nine-month peak as drivers took to the roads on holiday travel,
crude oil prices kept climbing and refiners further cut fuel
production due to weak margins.
Prices at the pump topped $2.25 a gallon this week,
according to the American Automobile Association, the highest
since March when COVID-19 was declared a global pandemic.
Supplies fell to the lowest in a month at 236.6 million barrels,
according to U.S. government data released on Wednesday.
U.S. rush-hour traffic this holiday season reached pandemic
highs, with a congestion index posting the biggest
month-on-month increase since July, according to location
technology company TomTom. Still, no U.S. city is above 2019
levels.
Stay-at-home orders to stop the spread of COVID-19 have
weighed on fuel demand all year, sinking demand and prices for
gasoline and other motor fuels. Refineries are running at
average utilization rates below 80% this year, the latest Energy
Information Administration data showed.
Major refiners Exxon Mobil Corp and Royal Dutch
Shell Plc are trimming output on weak profits.
Contributing to the retail price rise: oil has
rallied to around 10-month highs as vaccine distributions
expand.
"The rise in prices is tied a little bit to holiday travel
but mostly to refinery maintenance and the rise in crude oil
prices in December," said AAA spokeswoman Jeanette Casselano.
The fuel price increase may not last long into the new year
because of low demand in the first quarter, Casselano said.
New refinery cuts coincided with holiday travel, which
boosted gasoline demand to about 8.1 million barrels per day
(bpd) in the week to Dec. 25, EIA data showed on Wednesday, from
7.6 million bpd at the start of the month.
Inventories are now on par with year-ago levels, said Julie
Torgersrud, an analyst at consultants Rystad Energy. More than
500,000 bpd of U.S. crude distillation capacity was removed in
2020 and reductions will expand in the new year, Torgersrud
said.
"We expect refinery runs to plateau around their current
level, 14.1 million (bpd), for the rest of 2020 and into the
first weeks of 2021, which suggests that inventories will likely
start to build as vacation traveling dampens," she added.
(Reporting by Stephanie Kelly; additional reporting by Laura
Sanicola; Editing by David Gregorio)
