Twitter

Welcome: Guest User

Register / Login

Build in U.S. crude oil stocks tempered by 298,000 b/d decline in imports

New York, 23 May 2012

Platts – U.S. crude oil stocks climbed 883,000 barrels to 382.527 million barrels for the week ending May 18, U.S. Energy Information Administration (EIA) data showed Wednesday, the ninth consecutive build in inventories. The increase in crude inventories was smaller than recent weeks, primarily due to a 298,000-barrels-per-day (b/d) decline in imports, which totaled 8.583 million b/d.

The increase pushed total crude oil stocks up 8.44% from the five-year average, according to EIA data. U.S. refiners decreased crude runs across the past week by 57,000 b/d to 14.987 million b/d, as aggregate refinery utilization, or run rates, dipped 0.2 percentage points to 88.1% of capacity.

Regionally, crude oil stocks increased in every region except the U.S. Gulf Coast, which saw a 1.075-million-barrel draw, according to EIA data. However, imports to the Gulf Coast were up 244,000 b/d, despite the recent flip in the Louisiana Light Sweet (LLS)/Brent spread which saw LLS trading at a significant discount to the international grade, thus closing the transatlantic arbitrage, according to a Goldman Sachs research note.

LLS traditionally trades at a $1-2 premium to Brent, reflecting both the draw and the expense of shipping Brent-priced crudes across the Atlantic Ocean to U.S. Atlantic and Gulf Coast refiners.

While the differential suggests a disincentive to move more expensive Brent crude to the Gulf, the effect on imports to the Gulf Coast is not yet reflected in the EIA data, suggesting that imports may be down in the near future.

Crude oil stocks in the U.S. Atlantic Coast (USAC) increased 284,000 barrels despite a rather large 431,000 b/d decline in imports to the region. Crude runs were down 172,000 b/d in the region over the week, reflected in a staggering decline in USAC refinery utilization. USAC run rates were down 14.7 percentage points to 69.4% of capacity, as refiners struggle to maintain margins. USAC refinery margins to Bonny Light have struggled to stay above $10 per barrel (/b) for the last eight weeks, and averaged $7.95/b over last week.

Midwest stocks increased 1.48* million barrels despite a 276,000 b/d decline in imports. The increase came on the back of a 1.668 million-barrel increase in crude stocks in Cushing, Oklahoma, the delivery hub for the New York Mercantile Exchange (NYMEX) crude oil futures contract. The increase pushes crude oil in storage at Cushing to a record 46.80* million barrels.

Crude runs were up by 56,000 b/d in the Midwest as refineries increased operable capacity by 2.3 percentage points to 96%. Midwest refiners continue to enjoy stellar cracking margins, averaging $29.26/b across the week.

U.S. CRUDE OIL IMPORTS DOWN

U.S. crude oil imports were down 298,000 b/d last week as U.S. crude production increased by 90,000 b/d to 6.24 million b/d. The decline in imports was led by a 351,000 b/d decline in imports from Venezuela. Imports from Saudi Arabia were down 220,000 b/d; Mexican imports were down 232,000 b/d; Canadian imports were down 135,000 b/d; Angolan imports were down 249,000 b/d; and Nigerian imports were down 111,000 b/d.

This was offset slightly by a 670,000 b/d increase in imports from Iraq, a 379,000 b/d increase in imports from Kuwait, and a 277,000 b/d increase in imports from Algeria.

GASOLINE STOCKS DRAW, DISTILLATE STOCKS BUILD

Total U.S. gasoline stocks declined by roughly 3.3 million barrels to just greater than 201 million barrels for the week, EIA said. The Platts survey predicted a draw of 200,000 barrels. The EIA figure, however, was less than the 4.52-million-barrel draw reported by the API.

Meanwhile, total U.S. distillates stocks decreased 309,000 barrels to 119.5 million barrels, according to the EIA, contrary to analysts surveyed by Platts, who expected stocks to increase 350,000 barrels.

Ends --

For more information on crude oil, visit the Platts website