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S&P Global Platts Analysis of U.S. Energy Information Administration (EIA) Data


EIA Data: Mixed inventory report shows crude build, product drawdowns

By Geoffrey Craig, S&P Global Platts Oil Futures Editor


New York - December 29, 2016


U.S. EIA Data Reported


  • Refinery activity slowed despite rise in crack spreads
  • Crude imports fell 304,000 barrels per day (b/d)
  • Gasoline exports jumped 354,000 b/d


U.S. crude oil inventories rose unexpectedly last week, while distillates and gasoline stocks both saw surprise drawdowns, according to the U.S. Energy Information Administration (EIA) data released Thursday and an analysis by S&P Global Platts.

Crude inventories increased 614,000 barrels to 486.063 million barrels in the week that ended December 23, EIA data showed. Analysts S&P Global Platts surveyed Tuesday were looking for a draw of 1.5 million barrels.

The main driver behind last week's build was a slowdown in refinery activity. Crude oil runs fell 101,000 b/d to 16.557 million b/d, lowering the refinery utilization rate by 0.5 percentage points to 91% of capacity.

Analysts were looking for an increase of 0.5 percentage points, which was consistent with seasonal trends as refiners tend to ramp up activity in December after completing autumn maintenance.
Instead, declines were seen across all regions, except the Gulf Coast, where the utilization rate edged 0.6 percentage point higher to 94.8% of capacity.

Market signals have actually been encouraging refiners to increase output. The front-month New York Mercantile Exchange (NYMEX) reformulated blend stock for oxygenate blending (RBOB) crack spread against West Texas Intermediate (WTI) dipped below $12/b in mid-December, but since then has climbed.

On Thursday, the NYMEX RBOB crack topped $17/b, which has only happened three other times since late June.

The front-month NYMEX ultra-low sulfur diesel (ULSD) crack spread against WTI has spent most of December between $17/b-$18.50/b, a range not seen for any extended period of time since November 2015.

CRUDE IMPORTS FALL

A decline in U.S. crude imports helped mitigate the size of last week's crude build. Crude oil imports dropped 304,000 b/d to 8.167 million b/d. Imports have averaged 7.9 million b/d so far in 2016.

The biggest decline was seen on the U.S. Atlantic Coast (USAC), where imports fell 406,000 b/d to 765,000 b/d. That helped trim USAC crude inventories by 1.083 million barrels to 13.553 million barrels.

Gulf Coast crude stocks increased 1.942 million barrels to 247.632 million barrels. The region's imports rose 144,000 b/d to 3.312 million b/d.

By country of origin, declines in imports from Nigeria, Colombia, Kuwait and Ecuador totaled 848,000 b/d.

Imports from Canada fell 21,000 b/d to 3.409 million b/d. Most Canadian imports enter the U.S. via the Midwest, where stocks rose 1.386 million barrels to 150.699 million barrels.

Stocks at Cushing, Oklahoma -- delivery point for the NYMEX crude oil futures contract -- rose 172,000 barrels to 66.435 million barrels.

Cushing has seen builds in seven of the last nine reporting periods after falling to 58.4 million barrels in the week that ended October 21.

EIA estimated U.S. crude oil production fell 20,000 b/d to 8.766 million b/d last week. Output in Alaska was up 10,000 b/d to 525,000 b/d, while production in the Lower 48 States declined 30,000 b/d to 8.241 million b/d.

DISTILLATE, GASOLINE DRAWS

While last week's drop in refinery utilization pushed crude stocks higher, it also put pressure on refined product stocks.

Distillate stocks fell 1.881 million barrels to 151.634 million barrels in the week that ended December 23, EIA data showed. Analysts were looking for a build of 800,000 barrels.

Distillates stocks sit nearly 1% below the year-ago level, marking the first time there has been a year-on-year deficit in 2016.

Strong exports have played a role. Distillates exports rose 286,000 b/d last week to 1.416 million b/d. Over the last four weeks, exports have averaged 1.249 million b/d, compared with an average of 1.045 million b/d in the four weeks prior to that.

Stocks of low and ultra-low sulfur diesel on the Gulf Coast fell 1.918 million barrels to 34.906 million barrels, a deficit of 4.67 million barrels compared with the year-ago level.

On the Atlantic Coast, home to the New York Harbor-delivered NYMEX ULSD futures contract, combined stocks rose 1.36 million barrels to 60.1 million barrels, some 6.7 million barrels or 12.5% more than a year ago.

Gasoline stocks fell 1.593 million barrels last week to 227.143 million barrels, compared with analysts' expectations of a build of 500,000 barrels.

Gasoline exports increased 354,000 b/d last week to 1.149 million b/d, helping stocks draw lower.

Compared with the five-year average for this time of year, total gasoline stocks sit at a 2.1% surplus. By region, the USAC is at a surplus of 9.4%, while the Gulf Coast and Midwest are nearly on par with their respective five-year averages.

Even though supplies appear plentiful, NYMEX RBOB futures have been rallying. January RBOB settled Wednesday at $1.6746 per gallon, the highest close for the front-month contract since August 2015.



CONTACT
Kathleen Tanzy, + 1 917 331 4607, kathleen.tanzy@spglobal.com

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