The EIA reported a 2.7 million barrel draw from US gasoline inventories last week. But a jump in production on the West Coast kept US gasoline inventories from an even steeper drop.
The West Coast market is largely isolated from the Gulf Coast refining center. With very limited pipeline access into Arizona, and the Jones Act making shipping from the USGC expensive, the market tends to rely on its own limited refining capacity. When that fails, imports from Canada, the Far East and Europe take up the slack.
So, when out of a 133,000 b/d week-over-week increase in US gasoline production 119,000 b/d is on the West Coast, it takes a bit of the luster off the number. Likewise, the 2.7 million barrel overall draw would look more bullish if the 1.7 million barrel build on the West Coast were taken out.
Gasoline demand cover remains anemic at 21.3 days, 1.65 below the five-year average and 0.95 below last year. The cracks should continue to narrow as the May/June crude spread tightens, but there will stil need to be a floor under the spread in order to attract more supply into the US.
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