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

EIA Data: Gasoline, distillates builds cast shadow on inventory data

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

NEW YORK - August 16, 2017

Surprise builds in U.S. gasoline and distillates inventories overshadowed a significant drawdown in crude stocks, according to U.S. Energy Information Administration (EIA) data and a commentary by Geoffrey Craig, oil futures editor, S&P Global Platts.

  • Crude oil runs remain near all-time high
  • Crude oil output in Lower 48 states highest since July 2015
  • Gasoline implied* demand drops 275,000 b/d

Oil futures pared price increases Wednesday, despite the EIA weekly inventory report showing U.S. crude stocks fell 8.945 million barrels to 466.492 million barrels the week ended August 11. Analysts surveyed Monday by S&P Global Platts were looking for a drop of 3.6 million barrels for the latest reporting week.

Last week’s drawdown was the seventh consecutive decline, bringing stocks to the lowest level since January 2016 and narrowing the surplus to the five-year average to 21.61%. That surplus stood at nearly 40% in early February, but began to come in as refinery activity ramped higher in the spring, leading to consistent draws that began the first week of April.

While market focus has been OPEC and its potential to tighten supplies, U.S. refiners have been the primary driver behind the recent inventory reduction.

Since the beginning of April, crude runs have averaged nearly 17.2 million barrels per day (b/d), which was 800,000 b/d more than the same period a year ago and 1.3 million b/d greater than the five-year average.

Market chatter has already turned to the seasonal downturn in refinery activity that usually starts in September, but refiners have yet to show signs of slowing.

Refiners processed 17.565 million b/d last week, which was 9,000 b/d below the record-high set the previous week, according to EIA data. Refinery utilization declined 0.2 percentage points to 96.1% of capacity. Analysts were looking for a decrease of 0.6 percentage point.

On the U.S. Gulf Coast (USGC), the epicenter of the U.S. refinery complex, the utilization rate increased 0.5 percentage points to 97% of capacity.

Strong refinery activity helped drive USGC stocks down 7.219 million barrels to 238.118 million barrels. By region, that was by far the biggest decline, followed by the West Coast's draw of 2.472 million barrels. The size of the USGC drawdown was mitigated by the region's imports, which rose 270,000 b/d to 2.809 million b/d.

Total imports were up 364,000 b/d last week to 8.126 million b/d. Imports from Saudi Arabia, Colombia, Venezuela and Iraq increased collectively by 814,000 b/d. Nigerian imports fell 372,000 b/d, while imports from Canada were nearly flat at 3.28 million b/d.


Exports rose 170,000 b/d last week to 877,000 b/d. Exports have averaged 808,000 b/d over the last five weeks, and 767,000 b/d year to date.

One question ahead will be whether the recent widening of the Brent- to-West Texas Intermediate (WTI) price spread lasts, and if so, whether that will induce more exports as U.S. producers chase higher prices abroad.

The front-month Intercontinental Exchange (ICE) Brent/WTI spread has been more than $3/b since August 10. The last time that spread broached $3/b was briefly in late March, and before that December 2015. One reason that WTI's discount to Brent has grown larger is the steady climb in U.S. production that is expected to last. EIA forecast shale output to average 6.148 million b/d in September, up 117,000 b/d from August.

Prices are therefore adjusting to improve the economics for U.S. exports, as producers will need to find new outlets, particularly with US refinery demand on the cusp of seasonal declines.

Total output increased last week by 79,000 b/d to 9.502 million b/d. Production in the Lower 48 states rose 25,000 b/d to 9.07 million b/d, its highest level since July 2015, according to EIA estimates.


The end of summer typically marks a decline in gasoline demand, which has become another seasonal factor that has been weighing on the oil complex recently with September around the corner.

Those concerns have been heightened by U.S. gasoline stocks, which have now built for consecutive reporting periods.

Inventories barely rose last week, up 22,000 barrels to 231.125 million barrels, but that still looked sufficiently bearish to keep New York Mercantile Exchange (NYMEX) reformulated blend stock for oxygenate blending (RBOB) futures in negative territory Wednesday morning.

Analysts were looking for a drawdown of 400,000 barrels. And the five-year average showed a decline of 1.677 million barrels.

Gasoline stocks sit at a surplus of 6.5% to the five-year average for the same reporting period. That figure had been whittled down to 3.5% the week ended July 28 after seven straight weekly declines in gasoline stocks.

That trend has been even more stark on the Atlantic Coast, where the surplus to the five-year average had narrowed to 1% the week ended July 21, but now stands at 8.2% after three straight builds.

Gasoline implied demand fell 275,000 b/d to 9.522 million b/d, but still managed to exceed the five-year average by 174,000 b/d.

The four-week moving average was nearly flat at 9.746 million b/d, which was 24,000 b/d less than the year-ago level and 458,400 b/d above the five-year average for the same period.


Distillate stocks rose 702,000 barrels last week to 148.387 million barrels, which was basically the mirror opposite of market expectations, as analysts were looking for a 700,000-barrel decline.

Last week's build was slightly less than the 855,000-barrel build seen on average in 2012-16 for the same reporting period. Inventories' surplus to the five-year average was therefore little changed at around 9.8%.

On the Gulf Coast, stocks of low- and ultra-low sulfur diesel rose 2.231 million barrels to 43.565 million barrels. That represents a 9% surplus to last year and 21% surplus to the five-year average.

Implied distillate demand declined 288,000 b/d to 4.222 million b/d. The four-week moving average stood at 4.3 million b/d, which was about 600,000 b/d above last year and roughly 500,000 b/d more than the five-year average.

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

Kathleen Tanzy, + 1 917 331 4607,

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