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Surprise US crude draw sparks turnaround in oil futures

New York (Platts)--22 Feb 2018 350 pm EST/2050 GMT


Oil futures rose Thursday after US Energy Information Administration data showed an unexpected draw in crude stocks last week, lifting NYMEX April crude $1.09 to $62.77/b.

Crude stocks fell 1.616 million barrels to 420.479 million barrels in the week that ended February 16, snapping a streak of three straight builds.

Inventories typically build at this time of year as refinery demand slows because of winter maintenance. US refinery utilization fell 1.7 percentage points last week to 88.1% of capacity.

Analysts S&P Global Platts surveyed Tuesday expected a build of 2.5 million barrels. The five-year average for the same period shows an increase of 3.5 million barrels.

The market responded immediately to the EIA inventory data, turning positive and staying in the black for the rest of the session.

"The WTI price rose by nearly $1/b during the hour after the numbers were released, reversing some of the decline that took place over the past couple weeks," said Jenna Delaney, senior oil analyst at S&P Global Platts Analytics.

ICE April Brent settled Thursday at $66.39/b, up 97 cents.

Last week's decline in crude stocks was driven by trade flows, as imports plunged 867,000 b/d to 7.021 million b/d, while exports jumped 722,000 b/d to 2.044 million b/d.

Exports were driven higher by a surplus created by a combination of lower refinery demand and record-high US production, Citi Research analysts said Thursday.

US output averaged 10.27 million b/d, essentially unchanged from the week prior, which represented an all-time high, according to EIA weekly estimates that go back to 1983.

"However, we note that a deep global refinery maintenance season could mean some headwinds to US crude exports in the near term," Citi said.

Stocks at the NYMEX crude delivery point in Cushing, Oklahoma, fell 2.664 million barrels last week to 30.003 million barrels.

Inventories there are at their lowest point since December 2014. Cushing stocks have fallen for nine straight weeks and in 14 of the last 15 weeks.

"The overall impression from this set of stats was bullish as total petroleum stocks drew 7.9 million barrels and Cushing stocks are now below the five-year range," said Torbjorn Kjus, oil market analyst at DNB Bank.

NYMEX March RBOB rose 84 cents to $1.7657/gal after EIA data showed gasoline stocks on the Atlantic Coast fell 748,000 barrels to 65.293 million barrels, a deficit of 3.9% to the five-year average.

Total gasoline stocks rose 261,000 barrels last week to 249.334 million barrels, a surplus of 2.4% to the five-year average.

Analysts expected a draw of 800,000 barrels. For the same period, stocks fell by 2.1 million barrels on average from 2013 through 2017.

Total distillate stocks fell 2.422 million barrels to 138.945 million barrels, a surplus of 1.1% to the five-year average.

Analysts were looking for a draw of 1.6 million barrels. The five-year average for the same reporting period is a pull of 2.3 million barrels.

NYMEX March ULSD settled 2.04 cents higher at $1.9527/gal.

--Geoffrey Craig, geoffrey.craig@spglobal.com

--Edited by Keiron Greenhalgh, keiron.greenhalgh@spglobal.com




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