Platts: Pre-Report Survey of EIA/API Data Suggests a 3 Million-Barrel Draw in U.S. Crude Oil Stocks

2013-07-31

U.S. commercial crude stocks are expected to have fallen another 3 million barrels during the reporting week ended July 26, according to Platts analysis and a survey of oil analysts.

The U.S. Energy Information Administration (EIA) is scheduled to release its weekly data at 10:30 a.m. EDT (1430 GMT) Wednesday.

At 364.2 million barrels, according to EIA data, U.S. crude oil stocks have fallen nearly 30 million barrels during the past four reporting periods. That said, crude oil stocks remain more than 5% above the EIA five-year average, even if that surplus has narrowed from around 11.5% during the same period.

Stocks at the Cushing, Oklahoma, storage hub - delivery point for the New York Mercantile Exchange (NYMEX) crude oil futures contract - have declined sharply during a similar time frame. Cushing stocks have fallen 5.6 million barrels during the past four reporting periods to just over 44 million barrels, EIA data shows. This is almost 2.5 million barrels below year-ago levels; however, it is also nearly 29% above the EIA five-year average.

"We're looking for another draw here on a dip in imports and another strong week of [sharply higher refinery runs]," Oil Outlooks President Carl Larry said.

U.S. crude oil imports have been trending lower recently. At just over 8 million barrels per day (b/d) in the week ended July 19, imports were more than 1.6 million b/d lower than at the same time last year. In fact, imports have been more than 1 million b/d below year-ago levels for the prior four reporting periods.

That said, the U.S. Gulf Coast is still priced to attract imports, Morgan Stanley research shows.

"We continue to expect crude oil imports into the Gulf to rise," Morgan Stanley analysts said in a note. "With Houston pricing only $2.23 per barrel under LLS, barge flows from Houston to St. James may be limited.This should only reinforce the need for crude oil imports into Louisiana."

Meanwhile, U.S. refinery runs have been running at a blistering pace, averaging over 92% of capacity for the past four weeks. Crude oil runs alone have been above 16 million b/d - at or around record levels - during that period.

Runs could have edged lower during the week ended July 26 after a few key refineries shut units. Motiva's 600,000 b/d Port Arthur, Texas, refinery shut some units due to lightning and bad weather, according to the refinery.

Also, Total's 174,000 b/d Port Arthur refinery shut a crude oil unit and a delayed coker due to a power outage, according to sources.

Tesoro's 265,000 b/d Carson, California, refinery reported flaring during the week ended July 26, with sources attributing it to a downed reformer. Tesoro spokeswoman Tina Barbee said the facility was undergoing maintenance.

Also during the week ended July 26, Philadelphia Energy Solutions' 300,000 b/d Philadelphia, Pennsylvania, refinery shut a 20,000 b/d alkylation unit and a hydrotreater.

Analysts had mixed views, but on average expect U.S. refinery utilization to increase 0.2 percentage point.

"As long as refineries are running over 16 million b/d, there's only so much more they can do, but so much more we can expect," Larry said.

U.S. gasoline stocks are expected to have fallen 1.5 million barrels during the week ended July 26, in line with seasonal norms. At 222.7 million barrels, gasoline stocks are 3.27% above the EIA five-year average.

Gasoline stocks on the U.S. Atlantic Coast (USAC) - home to the New York Harbor-delivered NYMEX RBOB contract - are ample, at a near 6% surplus to the EIA five-year average, but have been contracting steadily during the past five weeks. USAC gasoline stocks have fallen 2.8 million barrels since the week ended June 21.

Larry expects gasoline demand to improve in line with a bullish reading from the U.S. Department of Labor when it releases its private non-farm payroll data on Friday. Economists are expecting private non-farm payrolls to show an increase of 190,000.

"No matter how many more miles you add to the CAFE standards, miles driven increase with more workers," Larry said. "More miles means higher consumption."

U.S. implied demand* for gasoline has been above 9 million b/d on a four-week moving average for the past three reporting weeks, EIA data shows. It is the first sustained period above 9 million b/d since September 2012.

Meanwhile, U.S. distillate stocks are expected to have increased 800,000 barrels, in line with the EIA five-year average.

At 126.5 million barrels, U.S. distillate stocks are at a 13% deficit to the five-year average. However, distillate production of just under 5 million b/d is more than 300,000 b/d higher than a year ago. Production had been at record levels above 5 million b/d for the last two reporting periods.

Source from : Platts

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