Analysts look for US crude stock build, product draws

New York (Platts)--14Mar2011/524 pm EDT/2124 GMT

Weekly oil data from the US Energy Information Administration and the American Petroleum Institute should show a build of about 2.1 million barrels in US commercial crude stocks for the reporting week ended March 11, analysts polled by Platts said Monday.

API is scheduled to release its weekly data at 4:30 p.m. EST (2030 GMT) Tuesday. EIA's weekly oil statistics will be released at 10:30 a.m. EST (1430 GMT) Wednesday.

Analysts were looking for a gasoline stock draw of 1.5 million barrels and a distillate stock draw of 1.4 million barrels. Analysts cited seasonal trends for the expected crude stock build and product draws.

"This week has a very reliable seasonality, with eight of the last nine years showing...drawdowns in distillate stocks and gasoline stocks, and also showing inventory builds in crude oil stocks," Cameron Hanover analysts said in a report.

"Crude supplies are expected to show a slight upswing. Crude stocks have built in five of the past five years with the average hike approximating 1.8 [million barrels]," said independent analyst Jim Ritterbusch said in a report.

A rebound in crude imports could also feed into a stock build. Imports have fallen to 8.3 million b/d for the week ending March 4 from 9.385 million b/d the week ending January 21, according to the EIA's data.

MF Global analyst Tom Pawlicki attributed the import drop to a wide price premium for ICE Brent futures to the NYMEX crude futures. The Brent premium "had caused oil shipments to be diverted away from the US to other destinations in the Atlantic," he said in a report.

The April Brent-WTI spread widened to $16.03/b on February 21, but narrowed to $8.04/b on March 8 before widening back out to $12.68/b on March 11.

"Given the narrowing in the spread...it's likely that the arb window may have closed to some degree. That could certainly change soon, as the spread widened again in the past three days. But for this week's report, we think that imports could be additive to inventories," Pawlicki said.

Analysts polled by Platts were looking for refinery utilization to come in unchanged at 82%, based on last week's EIA numbers.

Ritterbusch was also expecting a crude stock build of 200,000-300,000 barrels at Cushing, Oklahoma, the delivery point for the NYMEX light sweet crude futures contract.

Cushing stocks were at an all-time high of 40.263 million barrels for the week ending March 4, according to the EIA.

Despite the builds at Cushing, the NYMEX crude contango has narrowed recently. The April/May spread settled at minus $1.19/b March 11, in from minus $3.53/b on February 14.

Analysts were looking for refined product stocks to draw along with seasonal tendencies, for the most part.

"We look for gasoline stocks to post a small draw as apparent demand likely remained strong near 9.2 [million b/d] amidst continued distributor stocking," Ritterbusch said. "A stock draw was also likely influenced by another small downshift in imports."

But Pawlicki did not see current levels of demand holding up.

"As a result, we look for reductions in product inventories that are slightly less than their five-year average," he said.

--Jeff Mower, jeff_mower@platts.com

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