BY CONTINUING TO USE THIS SITE, YOU ARE AGREEING TO OUR USE OF COOKIES. REVIEW OUR PRIVACY & COOKIE NOTICE
X

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


EIA Data: U.S. Gulf Coast (USGC) Refining Helps Push Crude Oil Inventories Lower

By Geoffrey Craig, oil futures editor, S&P Global Platts


NEW YORK - May 24, 2017


U.S. crude oil inventories fell in the week ended May 19, the seventh straight weekly drop, while gasoline and distillates stocks also declined, according to U.S. Energy Information Administration (EIA) data and a commentary by Geoffrey Craig, oil futures editor, S&P Global Platts.


  • USGC utilization rate averaging 95% last five weeks


  • Imports from Saudi Arabia at 1.37 million barrels per day (b/d)


  • Distillates stocks down 14 of last 15 weeks



Crude inventories showed a drawdown of 4.432 million barrels in the latest reporting week ended Friday, to 516.34 million barrels, according to EIA. Analysts surveyed Monday by S&P Global Platts were looking for a draw of 2.8 million barrels.

After building almost non-stop from January through March, crude stocks have since declined for seven straight weeks by 19.2 million barrels.

That turnaround may have helped convince some OPEC members that supply cuts have had a delayed impact and should be given more time to accomplish the goal of draining crude stocks to levels around the five-year average.

Oil ministers meeting Thursday in Vienna at OPEC headquarters are widely expected to extend supply cuts for a nine month period through March.

Despite recent crude oil drawdowns, U.S. crude stocks remain 108.82 million barrels above the five-year average for this time of year. Erasing that surplus will be made easier next year when the five-year average is calculated after replacing a year of relatively low stocks (2012) with a year of much higher stocks (2017).

Apart from the arithmetic involved, a key driver would be hard-running refinery operations. U.S. refinery activity has been unusually strong since March, which has helped draw stocks lower.

Crude runs rose 159,000 b/d last week to 17.281 million b/d, just shy of the record 17.285 million b/d that was set the week that ended April 21.

Refinery utilization increased 0.1 percentage point to 93.5% of capacity, equaling analyst expectations. For the last five weeks, utilization has averaged 93.16%, compared with 89.42% a year ago over the same period.

Utilization on the U.S. Gulf Coast (USGC) -- home to more than 50% of total U.S. operable capacity -- has averaged 95% the last five weeks, versus 91.5% last year during the same time of year.

Despite the recent rebound in crude prices, refiners on the USGC are still profitable. Coking margins for imported sour grades are holding up, even as supply has tightened.

For example, USGC coking margins for Mexico's Maya have averaged $8.62/b so far in May. While that is down from almost $13/b over March and April, it's unlikely to trigger a pullback in runs.

A major issue moving forward is whether the refined product market will be capable of absorbing the additional supply being churned out.

There is some concern in the market that high refinery runs will cause gasoline and distillate stocks to swell unless demand can remain strong, says Jenna Delaney, senior oil analyst at Platts Analytics, a forecasting and analytics unit of S&P Global Platts.

Gasoline and distillate stocks look "elevated on an outright basis," but are within the normal range when viewed as how much needs to be in storage to cover a certain amount of days of demand, she said.




CRUDE IMPORTS FALL



Crude imports fell 296,000 b/d last week to 8.294 million b/d. Imports have averaged 8.179 million b/d year-to-date, exceeding the year-ago level by 375,000 b/d, despite OPEC cuts in place since January.

By country of origin, imports from Canada fell 452,000 b/d to 3.047 million b/d, while imports from Iraq were down 456,000 b/d to 313,000 b/d.

However, imports from Saudi Arabia were nearly flat at 1.371 million b/d, and imports from fellow OPEC producer Kuwait averaged 478,000 b/d after having made no shipments the week before.

Crude imports have been running above year prior levels even though US production stands 553,000 b/d higher at 9.32 million b/d. Output is at its highest level since August 2015, according to EIA estimates.

U.S. crude exports have provided an outlet for rising production. Exports fell 461,000 b/d last week to 625,000 b/d, averaging 760,000 b/d year to date.




U.S. ATLANTIC COAST (USAC) GASOLINE SURPLUS



U.S. gasoline stocks fell 787,000 barrels last week to 239.882 million barrels, EIA data showed. Analysts expected a decline of 400,000 barrels.

Despite three straight weeks of draws, gasoline stocks have built 3.75 million barrels the last six weeks, raising the surplus to the five-year average from 12.5 million barrels to 21 million barrels.

Stocks on the Atlantic Coast, home to the New York Harbor-delivered New York Mercantile Exchange reformulated blend stock for oxygenate blending (RBOB) futures contract, fell 177,000 barrels last week to 69.98 million barrels, a surplus of 8.95 million barrels to the five-year average.

The four-week moving average of implied gasoline demand has been above the five-year average since mid-February, but has fallen short of the year-ago level during that time by an average of 264,000 b/d.

Implied* demand rose 252,000 b/d last week to 9.704 million b/d, versus 9.516 million b/d a year ago and the five-year average of 9.197 million b/d.




DISTILLATE STOCKS DRAW SLIGHTLY



Distillate stocks decreased 485,000 barrels to 146.339 million barrels in the week that ended May 19, EIA data showed. Analysts were looking for a draw of 500,000 barrels.

Inventories have fallen 14 of last 15 reporting periods, putting stocks 4.5 million barrels below the year-ago level, but they remain 19.5 million barrels above the five-year average.

On the Gulf Coast, combined stocks of low- and ultra-low sulfur were up 339,000 barrels last week to 39.5 million barrels.

Since late January, USGC combined stocks have declined 7.9 million barrels, compared with an average draw of 1.76 million barrels from 2012-16 over the same period.

Strong exports have helped pull USGC stocks lower. Distillate exports averaged 1.008 million b/d last week, which was nearly identical to the year-to-date average.

Combined stocks on the Atlantic Coast dipped 190,000 barrels last week to 49.538 million barrels, which was 653,000 barrels less than a year ago, but 18.5 million barrels above the five-year average.

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


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

About S&P Global Platts
At S&P Global Platts, we provide the insights; you make better informed trading and business decisions with confidence. We’re the leading independent provider of information and benchmark prices for the commodities and energy markets. Customers in over 150 countries look to our expertise in news, pricing and analytics to deliver greater transparency and efficiency to markets. S&P Global Platts coverage includes oil and gas, power, petrochemicals, metals, agriculture and shipping.

S&P Global Platts is a division of S&P Global (NYSE: SPGI), which provides essential intelligence for individuals, companies and governments to make decisions with confidence. For more information, visit www.platts.com.




Copyright © 2018 S&P Global Platts, a division of S&P Global. All rights reserved.