US crude stocks fell 9.87 million barrels last week to 373.92 million barrels, the second large draw in two weeks, data released by the US Energy Information Administration showed Wednesday. Especially bullish for NYMEX crude futures was a draw at the Cushing, Oklahoma, delivery point of 2.69 million barrels. NYMEX crude futures rallied $2.99/barrel on the data, settling at $106.52/b.
New York - July 10, 2013
U.S. commercial crude oil stocks fell 9.87 million barrels to 373.92 million barrels during the reporting week ended July 5, Energy Information Administration (EIA) data showed Wednesday.
The latest decline marks the sharpest two-week draw in U.S. crude oil stocks ever reported in EIA data, as stocks have tumbled 20.22 million barrels from 394.14 million barrels during the reporting week ended June 21.
This is also the first time since March 2012 that U.S. crude oil stocks are lower than year-ago levels. Last year at this time, crude oil stocks were 378.2 million barrels, just over 11% above the EIA five-year average.
Despite the declines, U.S. crude oil stocks remain 8.2% above the five-year average.
Analysts surveyed Monday by Platts had been expecting a draw closer to 3.8 million barrels.
Crude oil stocks fell sharply in Cushing, Oklahoma – the delivery point for the New York Mercantile Exchange (NYMEX) crude oil futures contract. Cushing stocks fell a bullish 2.69 million barrels to 46.97 million barrels during the week ended July 5, representing a 37% surplus to the five-year average. However, this surplus is down sharply from the week ended June 28, when Cushing stocks were 46% above the five-year average.
The Cushing draw helped push total Midwest stocks 3.48 million barrels lower to 111.63 million barrels as imports from Canada tumbled 169,000 barrels per day (b/d) to 2.36 million b/d, likely due to heavy flooding in Alberta.
However, the sharpest declines were seen in the U.S. Gulf Coast (USGC) region, where stocks fell 4.16 million barrels to 181.39 million barrels during the week ended July 5, as imports remain sluggish and crude oil runs rampant.
Despite increasing 130,000 b/d to 3.43 million b/d, imports to the USGC are still comparatively low. Imports were 4.51 million b/d this reporting week a year ago.
Crude oil imports from Venezuela tumbled 268,000 b/d to 443,000 b/d, while imports from Angola dropped 294,000 b/d to 72,000 b/d. Crude oil imports from Canada, Iraq, Nigeria and Brazil were also lower on the week.
Crude oil imports from Saudi Arabia, meanwhile, jumped 456,000 b/d to 1.33 million b/d, and imports from Colombia rose 590,000 b/d to 828,000 b/d.
Likewise, although crude oil runs to USGC refineries fell 28,000 b/d to 8.5 million b/d, they are still elevated. USGC refineries are operating at 94.7% of capacity.
Total U.S. crude oil inputs at 16.118 million b/d were the highest since the week ended July 1, 2005, when inputs were at 16.464 million b/d. This helped to push refinery utilization rates 0.2 percentage point higher to 92.4% of capacity, largely in line with analysts’ expectations.
Meanwhile, a rise in operable capacity and runs in the U.S. Midwest and on the USGC during much of the past year has more than made up for a drop on the U.S. Atlantic Coast (USAC).
USAC operable capacity at 1.293 million b/d the week ended July 5 was down from 1.618 million b/d in March 2012, as refiners closed because of poor margins. During roughly the same period, operable capacity in the Midwest has risen 106,000 b/d to 3.769 million b/d, while USGC capacity has climbed 368,000 b/d to 9.093 million b/d, EIA data showed.
U.S. gasoline stocks, meanwhile, fell 2.63 million barrels to 221.03 million barrels during the week ended July 5, led by a 1.76 million-barrel draw in USGC stocks.
On a four-week moving average, U.S. implied demand* for gasoline rose 163,000 b/d to 9.08 million b/d. At 9.3 million b/d during the week ended July 5, outright demand is at its highest in nearly a year.
Stocks on the USAC – home to the New York Harbor-delivered NYMEX RBOB contract – fell 362,000 b/d to 62.64 million barrels. USAC gasoline imports at 573,000 b/d on a four-week moving average were down 242,000 b/d from the same period last year.
With U.S. refiners increasing runs, and with access to USGC gasoline via the Colonial Pipeline, the need for imported gasoline may have waned. U.S. gasoline production at 9.586 million b/d during the week ended July 5 was up 486,000 b/d from the week ended June 14. Of the total increase, 163,000 b/d was seen in the Midwest, and 146,000 b/d in the USGC.
U.S. distillate stocks rose 3.04 million barrels to 123.81 million barrels during the week ended July 5 as combined low sulfur (LS) and ultra low sulfur diesel (ULSD) output at 4.825 million b/d was up 206,000 b/d on the week, and at a record high.
Although combined LS and ULSD stocks on the USAC climbed 2.61 million barrels during the week ended July 5 to 32.02 million barrels, putting inventories at 20% above the five-year average, production of ULSD in the region fell.
ULSD production on the USGC rose 92,000 b/c to 2.56 million b/d (LS production stayed flat), Midwest ULSD production rose 56,000 b/d to 1.014 million b/d, and U.S. West Coast ULSD production rose 67,000 b/d to 596,000 b/d.
Stocks on the USGC – which is a major supplier to the USAC as well as a major exporter – fell 1.58 million barrels to 33.46 million barrels, a 7.5% deficit to the five-year average.
Implied demand* for distillates – which does not include exports – fell 58,000 b/d to 4.051 million b/d on a four-week moving average.
* Implied demand is the amount of product that moves through the U.S. distribution system, not actual end consumption.
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