U.S. inventories of gasoline, distillate and jet fuel are expected to fall to their lowest levels in more than two decades in 2026 thanks to a combination of refinery closures and increased demand that will deplete supplies, according to the Energy Information Administration.

Citing data from its latest Short Term Energy Outlook, EIA forecasts that stockpiles of the three transportation fuels will fall to a combined 375 million bbl by the end of next year, the lowest levels since the 358 million bbl total at the end of 2000.

LyondellBasell is in the process of shutting its 290,000 b/d Houston refinery, with a target of completing the work by the end of the first quarter of the year. Phillips 66 has said it will cease operations at its 139,000 b/d refinery in Wilmington, Calif., by the end of the year.

Meanwhile, EIA is forecasting that U.S. consumption of jet fuel and distillate will rise both this year and next, with distillate consumption going from 3.79 million b/d in 2024 to 3.96 million b/d this year and 3.97 million b/d in 2026.

Jet fuel consumption is expected to rise from 1.7 million b/d last year to 1.74 million b/d this year and 1.76 million b/d in 2026. EIA expects increased fuel efficiency to lead to declines in gasoline consumption by the end of 2026, with consumption climbing from 8.94 million b/d in 2024 to 8.95 million b/d in 2025 and then falling to 8.87 million b/d in 2026.

Even with reduced consumption, the agency expects gasoline stocks to fall from 237.7 million bbl at the end of last year to 235.5 million bbl at the end of this year and 229.6 million bbl by the end of 2026.

It expects even sharper declines in distillate stockpiles, which it expects to fall from 128.9 million bbl at the end of last year to 112.2 million bbl by December and then 108.9 million bbl at the end of 2026.

Tight supply for the three fuels could be a boon to refiners, with EIA saying "we ... forecast wholesale refinery margins for the three fuels will increase. In our forecast, however, these wider margins are partially offset by falling crude oil prices, leading to relatively smaller increases in retail fuel prices or even a decline in retail gasoline prices."

EIA currently forecasts retail gasoline prices will fall from an average $3.31/gal in 2024 to $3.21/gal in 2025 and $3.14/gal in 2026.

Retail diesel prices this year and next are also expected to be lower than the $3.76/gal 2024 average, falling to an average $3.63/gal this year and then rising to an average $3.70/gal in 2026.

Measuring inventories by days of supply available, EIA forecasts that gasoline days of supply should remain within historic ranges while distillate days of supply "will remain relatively low compared with historical averages," falling to about 26 days or more than about 28 days if biodiesel and renewable diesel supplies are included in the calculations.

But tight supply and rising demand is expected to take a significant bite into jet fuel available days of supply, which is expected to fall to about 21 days, the lowest level since 1963, EIA said.

This content was created by Oil Price Information Service, which is operated by Dow Jones & Co. OPIS is run independently from Dow Jones Newswires and The Wall Street Journal.

--Reporting by Steve Cronin, scronin@opisnet.com; Editing by Michael Kelly, mkelly@opisnet.com

(END) Dow Jones Newswires

March 03, 2025 14:22 ET (19:22 GMT)

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