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

EIA Data: Record-high crude oil exports contribute to inventories drawdown

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

NEW YORK - November 01, 2017

U.S. crude oil exports topped 2 million barrels per day (b/d) last week for the first time ever, spurred on by the continuation of a wide Brent-to-West Texas Intermediate (WTI) price spread, according to U.S. Energy Information Administration (EIA) data and a commentary by Geoffrey Craig, oil futures editor, S&P Global Platts.

  • Cushing, Oklahoma’s crude oil inventories continue to climb
  • U.S. Atlantic Coast (USAC) gasoline inventories at deficit to five-year average
  • Distillates exports set another record-high

Crude exports rose 209,000 b/d to 2.133 million b/d, beating the previous all-time high of 1.984 million b/d set the week ended September 29. The volume of crude being exported jumped the week ending September 22 by 563,000 b/d to nearly 1.5 million b/d, and has remained elevated since.

This trend is not surprising with Brent's premium to WTI growing from approximately $3/b in mid-August to $5/b-$7/b most of the time since September.

The front-month Intercontinental Exchange (ICE) Brent price spread averaged $5.85/b in October, and traded Wednesday afternoon around $6.20/b.

Growth in exports has contributed to the drawdown of barrels from storage. U.S. crude oil stocks fell by 2.435 million barrels last week to 454.906 million barrels, marking the fifth decline during the last six weeks.

Imports fell 552,000 b/d to 7.571 million b/d, which also contributed to last week's draw. Imports averaged 7.7 million b/d the last four weeks, flat with a year ago and 290,000 b/d below the year-to-date average prior to that.

Crude stocks typically rise at this time of year. However, given the recent pattern, analysts surveyed Monday by S&P Global Platts were looking for a counter-seasonal decline of 1.4 million barrels.

Inventories are now 14.6% greater than the five-year average. This is down from 25% in mid-September, providing bullish fodder for crude futures.

NYMEX December crude futures settled Tuesday at $54.38/b, a high for the prompt-month contract since late February. December crude futures ebbed Wednesday, trading near $54.20/b in the afternoon.

Despite the upward movement in the flat price, NYMEX crude's discount of more than $6/b to ICE Brent reveals some headwinds. For example: stocks at Cushing, Oklahoma -- delivery point for the NYMEX crude futures contract -- have been building steadily. Cushing inventories rose 90,000 barrels last week to 63.839 million barrels. Stocks have built 11 of the last 13 weeks by 8 million barrels, putting storage at its highest level since May.

Another factor is U.S. crude oil production, which has been above 9.5 million b/d since the week ending August 11, with the exception of a few weeks that were impacted by hurricanes in the Gulf of Mexico. Output averaged 9.553 million b/d last week, according to EIA estimates. That is up more than 1 million b/d from last year at this time.

The return of refinery demand post-autumn maintenance could help absorb some supply that otherwise would be exported. The amount of crude processed by refiners stayed above 16 million b/d last week for the second straight reporting period. The utilization rate increased 0.3 percentage points to 88.1% of capacity.


Despite a slight uptick in refinery utilization, gasoline stocks declined last week by 4.02 million barrels to 212.849 million barrels, versus an anticipated decline of 1.7 million barrels.

After four straight builds, gasoline inventories have fallen by 9.485 million barrels the last two reporting periods, lowering the surplus to the five-year average to less than 1%.

Gasoline stocks on the Atlantic Coast, which includes the delivery point for the NYMEX RBOB* contract, have fallen over the past three weeks by 4.2 million barrels to 53.99 million barrels, a discount of 2.5% to the five-year average.

Tightening stocks helped drive prompt NYMEX RBOB from around $1.55/gal October 9 to $1.77/gal October 31.

The November/December spread went from around parity in early October to backwardated 5 cents/gal Tuesday when the November contract expired. December RBOB was up 1.78 cents at 1.7503/gal Wednesday afternoon.

Gasoline implied demand rose 147,000 b/d to 9.461 million b/d. Over the last four weeks, demand has averaged 9.348 million b/d, exceeding the year-ago level by 257,000 b/d and the five-year average by 372,000 b/d.


Distillate stocks fell 320,000 barrels to 128.921 million barrels in the week that ended October 27, EIA data showed Wednesday.

Inventories have fallen eight of the last nine weeks by 20.2 million barrels, flipping from a surplus of 9.1% to the five-year average to a discount of 1%.

However, the size of last week's decline fell short of analysts' expectations, who were looking for a draw of 2.5 million barrels. NYMEX December ultra-low sulfur diesel (ULSD) was down 58 points at $1.8747/gal Wednesday afternoon.

U.S. distillates exports rose 109,000 b/d last week to 1.685 million b/d, setting a record-high for the second time in four weeks, according to EIA weekly data that goes back to June 2010.

S&P Global Platts calculations show delivered Gulf Coast export ULSD cargoes have held a steady discount to Latin America prices, suggesting an open arbitrage. For example, delivered USGC ULSD averaged a $1.40/b discount to CIF Argentina cargoes in October. Delivered USGC cargoes averaged near parity with cost, insurance, and freight (CIF)-based Northwest Europe and Mediterranean cargoes in October.

Despite strong export demand that has supported Gulf Coast differentials, arbitrage opportunities have opened for shipping ULSD along the Colonial Pipeline to the U.S. Northeast market. According to S&P Global Platts calculations, delivered USGC ULSD have averaged a discount of 30-40 points to Linden, New Jersey-based barrels this week. That arbitrage had been shut from December 2016 until September 13, 2017, and since then has been on and off until reopening Monday.

Moving barrels along the Colonial Pipeline will likely alleviate some of the surplus in the Gulf Coast, where stocks of low and ULSD are 11% greater than the five-year average at 36.1 million barrels.

USAC combined stocks rose last week by 720,000 barrels to 41.1 million barrels, raising the surplus to the five-year average to 9.2% from 6%. For the week ending October 20, stocks were at their lowest since July 2015.

* reformulated blend stock for oxygenate blending (RBOB)

Kathleen Tanzy, + 1 917 331 4607,

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