Analysis of U.S. EIA data: U.S. crude oil stocks draw again; gasoline inventories unexpectedly drop


U.S. commercial crude oil stocks fell for the fourth consecutive week, dropping 2.8 million barrels to 364.2 million barrels during the reporting week ended July 19, making for a nearly 30 million-barrel draw in inventories in a month, U.S. Energy Information Administration (EIA) data showed this week.

Still, crude oil stocks were about 5% above the five-year average for the reporting week ended July 19. The draw in stocks was in line with a Platts analysis and survey of analysts, who expected a 2.6 million-barrel decline.

Stocks at Cushing, Oklahoma – delivery point for the New York Mercantile Exchange (NYMEX) crude oil futures contract – fell 2.06 million barrels to 44.02 million barrels. This is the second straight week of draws at Cushing, totaling nearly 3 million barrels. Despite the draws, Cushing stocks were 29% greater than the five-year-average.

In the greater Midwest, stocks fell 4.6 million barrels to 105.6 million barrels as run rates there rose 0.2 percentage point to 94.8% of capacity. In the U.S. Gulf Coast (USGC) region, stocks rose 2.2 million barrels to 177.3 million barrels with run rates dipping 1.2 percentage points to 94.2% of capacity.

U.S. refinery run rates, although down slightly to 92.3% of capacity from 92.8% of capacity the week prior, remain firmly above 90% of capacity and have been since the week ended June 21.

Crude oil inputs fell 206,000 barrels per day (b/d) to 16.03 million b/d. Inputs have averaged over the 16 million b/d mark for the past four reporting periods, levels not seen since July 2007, prior to the recession.

At the same time, crude oil imports rose 327,000 b/d to 8.03 million b/d, with Canadian imports up 69,000 b/d and Mexican imports rising 359,000 b/d. Colombian imports also rose, up 180,000 b/d, while Saudi Arabian imports declined 423,000 b/d.

U.S. gasoline stocks fell 1.4 million barrels to 222.7 million barrels during the reporting week ended July 19, counter to analysts' expectations, EIA data showed.

A Platts analysis and survey of analysts showed U.S. gasoline stocks had been expected to rise 800,000 barrels.

The drawdown in gasoline stocks was likely a product of a strong increase in U.S. implied demand* and a sharp drop in imports.

Implied demand* for gasoline rose 253,000 b/d to 8.98 million b/d. On a four-week moving average, demand for gasoline during the week ended July 19 rose slightly to 9.08 million b/d, nearly 275,000 b/d greater than during a similar period a year ago.

Gasoline imports, meanwhile, fell 395,000 b/d to 322,000 b/d.

The bulk of the decline was split between the U.S. Atlantic Coast (USAC) and USGC. Gasoline stocks on the USAC – home to the New York Harbor-delivered NYMEX RBOB contract – fell 1.41 million barrels to 61.07 million barrels. This is the fourth consecutive weekly drawdown in USAC gasoline stocks. The region's surplus to the EIA five-year average has fallen during that period from around 13% to 5.7%.

The draw comes despite a 119,000 b/d increase in USAC production, which rose to 3.03 million b/d. However, USAC gasoline imports halved, down 310,000 b/d to 304,000 b/d, making up the bulk of the total reduction.

USGC stocks fell 1.27 million barrels to 76.9 million barrels, narrowing the region's surplus to the EIA five-year average to 6.3% from 10.5% as recently as the week ended June 28. USGC production rose 62,000 b/d to 2.05 million b/d.

These declines were offset slightly by a 1.1 million-barrel increase in Midwest gasoline stocks, which rose to 49.12 million barrels. Midwest gasoline production rose 65,000 b/d to 2.27 million b/d.

U.S. West Coast gasoline stocks rose 394,000 barrels to 29.54 million barrels during the week ended July 19, as production rose 103,000 b/d to 1.65 million b/d.

Meanwhile, U.S. distillate stocks fell 1.23 million barrels to 126.5 million barrels during the week ended July 19, again, counter to expectations.

Platts' analysis and survey of oil analysts showed distillate stocks were expected to rise 1.9 million barrels.

Declines were seen in all regions except for the USAC, where stocks rose 487,000 barrels to 41.5 million barrels. However, stocks in the Central Atlantic region fell 643,000 barrels to 23.71 million barrels.

USGC distillate stocks fell 752,000 barrels to 39.26 million barrels during the week ended July 19. Stocks of low and ultra low sulfur diesel fell a combined 1.29 million barrels to 33.94 million barrels, increasing the deficit to the EIA five-year average to just over 9%.

Distillate production came off slightly, dropping to 4.99 million b/d from a record high 5.08 million b/d a week prior.

Implied demand* for distillates remains strong at 4.31 million b/d, up from 3.82 million b/d. On a four-week moving average, distillate demand is up 104,000 b/d to 4.11 million b/d – almost 620,000 b/d greater than a year ago.

Implied demand* for distillates – which does not include exports – fell 58,000 b/d to 4.051 million b/d on a four-week moving average.

* Implied demand is the amount of product that moves through the U.S. distribution system, not actual end consumption.

Source from : Platts