US gasoline stocks jumped 4.134 million barrels last week, as production and imports rose, while demand remained lackluster, EIA data released Wednesday showed. The gasoline data was not entirely bearish, however, as US West Coast stocks fell for the second week in a row. You can read Platts analysis of itbelow.
Analysis of US EIA data: US gasoline stocks rise by 4.134 million barrels
New York - July 25, 2012
U.S. gasoline stocks jumped 4.134 million barrels to 210.04 million barrels during the week that ended July 20, as production and imports rose and demand remained lackluster, U.S. Energy Information Administration (EIA) data showed Wednesday.
New York Mercantile Exchange (NYMEX) August RBOB futures fell 8.77 cents to $2.7371 per gallon (/gal) after the report was released.
U.S. gasoline stocks were 1.85% less than the five-year average, an improvement from the prior week, when stocks were 3.6% below the average.
Stocks have been particularly tight on the Atlantic Coast, home of the New York delivery point for NYMEX RBOB futures.
But the EIA data showed Atlantic Coast stocks climbing 1.88 million barrels to 54.1 million barrels. Stocks were 6.6% less than the five-year average, down from a nearly 10% deficit the prior week.
On the supply side, U.S. gasoline imports jumped 385,000 barrels per day (b/d) to 1.02 million b/d, the highest level since the end of January. US production jumped 370,000 b/d to 9.284 million b/d.
Implied demand* for gasoline, meanwhile, remains sluggish, suggesting the peak of summer driving season has already passed. While demand inched up 32,000 b/d to 8.66 million b/d last week, on a four-week moving average demand at 8.8 million b/d was down for the third week in a row and down 2% year-on-year.
The additional gasoline supply has tightened the RBOB backwardation**. The August/September price spread was trading around 7.55 cents/gal at 1500 GMT, down from 9.9 cents/gal Tuesday, and 13.74 cents/gal from July 12.
Gulf Coast gasoline stocks climbed 1.697 million barrels to 72.58 million barrels, putting inventories 3.55% above the five-year average. Midwest stocks rose 846,000 barrels to 49.956 million barrels.
But the gasoline data was not entirely bearish. West Coast stocks fell for the second week in a row, down 377,000 barrels to 26.895 million barrels. That left stocks nearly 8% below the five-year average.
U.S. CRUDE OIL STOCKS UP
U.S. crude stocks were also bearish for futures prices, increasing 2.717 million barrels to 380.108 million barrels last week as imports rose and refinery runs increased.
September crude futures were down 1.40 cents at $87.10/barrel.
Midwest crude stocks, however, declined 274,000 barrels to 110.261 million barrels despite a 203,000-barrel increase in stocks at Cushing, Oklahoma, the delivery point for the NYMEX crude oil futures contract.
Significantly, imports to the Midwest were up 303,000 b/d to 1.979 million b/d – the region's highest level since the EIA starting reporting the data in January 1990.
Imports from Canada rose a net 68,000 b/d to 2.473 million b/d, although region-specific country imports are not broken down by the EIA. However, the bulk of Canadian imports to the US head to the Midwest.
Meanwhile, Saudi imports, were up 375,000 b/d to 1.608 million b/d, the highest since the week ended June 8.
Atlantic Coast stocks increased 1.453 million barrels to 10.721 million barrels, and Gulf Coast stocks jumped 1.030 million barrels to 188.568 million barrels. Imports to those regions increased by 107,000 b/d and 313,000 b/d, respectively. At 4.652 million b/d, Gulf Coast crude imports were at their highest since the week ended June 22.
Refinery runs increased 258,000 b/d to 15.796 million b/d, pushing U.S. refinery utilization rates up 1 percentage point to 93% of capacity. Midwest runs increased 190,000 b/d to 3.542 million b/d, and run rates jumped 5.2 percentage points to 96% of capacity, the highest since reaching the same level the week ended May 18.
Midwest refiners have enjoyed healthy margins for some time, and have every incentive to keep run rates high. The Midwest West Texas Intermediate (WTI) cracking margin averaged $23.39 per barrel the week ended July 20, according to Platts data and Turner, Mason & Co yield formulas.
* Implied demand is the amount of product that moves through the U.S. distribution system, not actual end consumption.
** Backwardation is a market condition wherein the price of a futures contract is trading below the expected spot price at contract maturity.
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