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Analysis of U.S. EIA data: U.S. crude oil stocks dip 5.6 million barrels, marking first drop in 11 weeks


New York - December 4, 2013


U.S. crude oil stocks dropped 5.6 million barrels the week ended November 29 to 385.8 million barrels on a bump-up in refinery run rates, U.S. Energy Information Administration (EIA) data showed Wednesday.


The draw was the first reported by the EIA in 11 weeks, but was far lower than the 12.4 million-barrel decline in crude oil stocks reported late Tuesday by the American Petroleum Institute (API).


The draw narrowed the crude oil stock surplus to the five-year average to 11.7%, or about 40.4 million barrels, for the week ended November 29. The surplus had reached 13.3% the week ended November 22.


Analysts polled by Platts were anticipating a 1.25 million-barrel draw for the week ended November 29 as refiners were expected to be returning from maintenance periods.


Refiners did increase utilization rates, which rose to 92.4% of capacity, from 89.4% of capacity the week ended November 22. The increase was mainly from a ramp-up in U.S. Atlantic Coast (USAC) run rates, which rose 8.1 percentage points to 84.3% of capacity.


Oil Market Analyst Torbjorn Kjus of DNB Bank said the reason for the large stock draw was record-high crude oil for this time of the year, most likely due to exports of refined product to Europe and elsewhere, not domestic demand.


The surge in USAC run rates could be related to the likely end of maintenance at Phillips 66's 238,000 barrels per day (b/d) Bayway refinery in Linden, New Jersey. On November 22, sources said there was talk that the fluid catalytic cracker at the Bayway refinery was coming out of turnaround.


Refiner rates on the U.S. Gulf Coast (USGC) were up 4.5 percentage points to 94.4% of capacity. That was partially offset by a 1.7 percentage-point drop in run rates in the U.S. Midwest to 94.4% of capacity.


Amid the rise in run rates, crack spreads remain favorable for U.S. refiners. The New York Mercantile Exchange (NYMEX) RBOB crack, basis WTI, was around $18.35 per barrel (/b) on Tuesday, up from around $12.64/b at the start of November.


The ultra-low sulfur diesel (ULSD) crack, basis WTI, was at $32.70/b on Tuesday, up more than $6.26/b from early November.


USGC CRUDE OIL DROPS; CUSHING STOCKS STEADY


Crude oil inventories in the USGC fell 2.8 million barrels the week ended November 29 and were down 800,000 barrels each in the Midwest and USAC.


Stocks at the NYMEX delivery hub at Cushing, Oklahoma, were steady at 40.6 million barrels the week ended November 29.


On Monday, TransCanada said in a U.S. government filing that the southern leg of its Keystone XL pipeline will begin deliveries from Cushing, Oklahoma, to Port Arthur, Texas, on January 3.


Analysts have said the opening of the pipeline will work to reduce the backlog of stocks at Cushing.


Based on EIA data, Cushing stocks were at a 22.7% surplus to the five-year average for the November 29 reporting week, but were about 5 million barrels below levels from a year earlier.


Imports of crude oil rose 91,000 b/d to 7.81 million b/d and were about 1.11 million b/d below the five-year average.


Mexican crude oil imports were up about 440,000 b/d to 1.3 million b/d the week ended November 29, and Kuwaiti imports rose 322,000 b/d to 684,000 b/d. At the same time, Iraqi imports dropped 427,000 b/d to 72,000 b/d, and Canadian imports fell 132,000 b/d to 2.54 million b/d.


U.S. gasoline stocks rose 1.8 million barrels the week ended November 29 to 212.4 million barrels, near analysts' expectations of a 2 million-barrel build. Within the category, blending components soared 3.2 million barrels to 173.1 million barrels.


Implied demand* for finished gasoline ticked 36,000 b/d lower to 8.87 million b/d, but was still higher than year-ago levels of around 8.35 million b/d.


Stocks on the USAC -- home of the New York delivery point for NYMEX RBOB -- were up 800,000 barrels to 54.3 million barrels the week ended November 29.


Distillate stocks rose 2.6 million barrels to 113.5 million barrels the week ended November 29, counter to analysts’ expectations of a 1 million-barrel decline.


Implied demand for the fuel sank 474,000 b/d to 3.55 million b/d.


ULSD stocks rose to 90.2 million barrels the week ended November 29, from 88.1 million barrels the week ended November 22.


On the USAC, combined stocks of ULSD and low-sulfur diesel were at 23.9 million barrels the week ended November 29 -- about 5.6% below the five-year average. On the USGC, the same stocks were at a 7.3% deficit to the five-year average.


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


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