Analysis of US EIA data: US crude stocks drop 3.699 million barrels, led by US Gulf Coast declines


New York - August 15, 2012


U.S. crude oil stocks dropped 3.729 million barrels for the week ended August 3 as imports fell in the key U.S. Gulf Coast and Midwest regions, the U.S. Energy Information Administration (EIA) said Wednesday.


U.S. crude oil stocks fell by 3.699 million barrels to 366.158 million barrels the week that ended August 10, led by declines in U.S. Gulf Coast and West Coast stocks, according to data released Wednesday by the U.S. Energy Information Administration (EIA).


The decline is larger than what analysts expected and exceeds the decline reported Tuesday by the American Petroleum Institute (API). API reported crude stocks rose nearly 2.8 million barrels last week while analysts polled by Platts on Monday expected crude stocks would decline by 1.5 million barrels.


The draw comes as U.S. refinery runs increased by 104,000 barrels per day (b/d) to 15.711 million b/d, although refinery run rates remained flat. The draw also comes as U.S. crude imports rose 90,000 b/d to 8.717 million b/d.


The biggest regional draw was in U.S. Gulf Coast stocks, which fell 3.535 million barrels to 180.631 million barrels, despite a substantial increase in imports. Gulf Coast imports rose 1.086 million b/d to 5.004 million b/d.


Gulf Coast refinery runs, meanwhile, rose 0.8 percentage points to 93.8% of capacity, as net crude inputs to Gulf refineries increased 222,000 b/d to 8.132 million b/d.


The uptick in Gulf Coast runs and decline in crude stocks was likely a combination of factors.


"I think it was due to strong refining margins and the anticipation of increasing exports, and the Chevron Richmond refinery being down had the Gulf Coast refineries working extra hard," said Carl Larry, president at Oil Outlooks and Opinions. "I think there will be even more coming from the Gulf next week if the BP Whiting situation gets worse."


BP Wednesday said three workers were injured when a fire broke out during routine maintenance on a hydrotreater at its 405,000 b/d Whiting, Indiana refinery. The maintenance has been suspended pending an ongoing investigation.


Analysts expecting a draw in stocks included complications in the Gulf of Mexico from Tropical Storm Ernesto's impact on Mexico's crude production, as well as shipping difficulties holding back Gulf Coast imports.


Meanwhile, West Coast stocks declined 805,000 b/d to 53.524 million b/d.


Implied demand* for U.S. products showed a sizable increase. Total implied demand rose 1.080 million barrels to 20.026 million barrels, led by a 469,000 barrel increase in gasoline supplied, pushing the weekly figure to 9.308 million b/d.


Distillate supplied fell 221,000 b/d to 3.569 million b/d.


However, on a four-week moving average U.S. total product supplied increased only 358,000 b/d to 19.300 million b/d – still a sizable increase and bullish for New York Mercantile Exchange (NYMEX) RBOB futures.


U.S. GASOLINE STOCKS DECLINE


U.S. gasoline stocks declined a bullish 2.371 million barrels to 203.698 million barrels, led by a 1.780-million-barrel decline in U.S. Atlantic Coast stocks, which puts that region in an increasingly tighter situation and will likely be bullish for the New York Harbor-delivered NYMEX RBOB contract.


This drop was roughly in line with analysts’ expectations of a 2.25-million-barrel decline in gasoline stocks.


Gulf Coast gasoline stocks, meanwhile, rose 1.088 million barrels to 72.358 million barrels.


West Coast gasoline stocks rose 883,000 barrels to 25.827 million barrels, despite a fire disrupting gasoline production at a crude unit at Chevron's 243,000 b/d Richmond, California refinery last week.


"The only thing I can think of is Valero's Benicia coming back online," said Larry, referring to the restart of Valero's 145,000 b/d refinery.


West Coast refinery runs were up 2.1 percentage points to 89.7% of capacity, as crude inputs rose 49,000 b/d to 2.589 million b/d.


U.S. distillate stocks rose 677,000 barrels to 124.218 million barrels over the week reported, beating analysts' expectations for the figure to remain flat.


The increase was led in part by builds in the Atlantic Coast and Midwest. Midwest distillates were up 1.045 million barrels to 27.905 million barrels. U.S. Atlantic Coast distillates were up 602,000 barrels to 42.267 million barrels.


The build was tempered by a 420,000-barrel-decline in Gulf Coast stocks, and a 597,000-barrel-build in West Coast stocks.


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


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