Crude oil runs at USGC refineries hit a record high the week ended August 15, up 177,000 barrels per day (b/d) to 8.74 million b/d, weekly U.S. Energy Information Administration (EIA) oil data showed.This helped to push USGC refinery utilization -- which includes feedstocks other than crude oil -- up 2.5 percentage points to a record 96.9% of capacity. Refinery utilization had last been higher at 96.5% of capacity in December 2012, when USGC operable capacity was just 3.72 million b/d. EIA has pegged USGC operable capacity at 3.81 million b/d since May.

The increased crude oil runs helped cut USGC stocks 5.47 million barrels to 191.22 million barrels during the week ended August 15. Despite the sharp drop, USGC crude oil stocks are still well-supplied, sitting more than 7.5% above the EIA five-year average.

Imports to the region rose 172,000 b/d to 3.53 million b/d, likely capping an even larger draw in crude oil stocks. Imports from traditional USGC suppliers Saudi Arabia and Mexico rallied, with the latter jumping 384,000 b/d to 1.25 million b/d and the former surging 506,000 b/d to 1.04 million b/d, the highest since late February.

The boost in USGC imports, however, comes despite the closure August 15 of the Louisiana Offshore Oil Port (LOOP). But many Saudi imports head to the 600,000 b/d Motiva Port Arthur refinery - the largest in the U.S. -- thus the refinery was likely spared any effects from the LOOP outage.

Imports from Venezuela fell 271,000 b/d to 585,000 b/d the week ended August 15, which could have been impacted by the outage. A large share of Venezuelan production heads to the massive, 425,000 b/d PDVSA-owned Citgo refinery in Lake Charles, Louisiana.

Meanwhile, total U.S. crude oil stocks fell 4.47 million barrels to 362.55 million barrels the week ended August 15, well-below analysts' predictions of a 1.6 million-barrel draw, which involved expectations of a 0.5 percentage-point decline in U.S. refinery utilization rates.

Yet total U.S. refinery utilization -- aided by the surging USGC runs -- rose 1.8 percentage points to 93.4% of capacity.

Crude oil stocks at Cushing, Oklahoma -- delivery hub for the New York Mercantile Exchange (NYMEX) crude oil futures contract -- jumped 1.76 million barrels to 20.16 million barrels the week ended August 15. This puts Cushing stocks at their highest since the week ended July 11. That said, inventories are still tight, sitting 46% below the EIA five-year average.

The build comes despite a sharply wider backwardation* in prompt NYMEX crude oil, which rose to $2.66 per barrel (/b) on Monday from under $1/b the week ended August 15. Analysts initially pegged the widening to the LOOP outage and the likely need for USGC refiners to pull crude oil out of Cushing storage.

With news that LOOP would be reopening ahead of schedule, backwardation narrowed again Tuesday to settle at $1.62/b.

Genscape analysts Monday said their data confirmed Cushing stocks were building -- a fact since borne out by both the American Petroleum Institute (API) as well as EIA data -- and this had been the main driver of sinking crude oil futures, which have fallen $10/b since trading over $104/b in June.

Crude oil futures indeed backed off following the release of EIA data, with the September contract -- expiring following Wednesday trade -- up just 40 cents at $94.48/b around 12:12 p.m. EDT (1612 GMT). Prior to the release, the contract was up well over $1/b.

But Genscape analysts did not mention the sharp backwardation -- which in this case was likely caused by strong prompt demand -- as evidenced by the soaring refinery runs -- and tight supply, at least temporarily.

Other analysts this week were puzzled by the backwardation in crude oil as the U.S. is technically awash with supply amid surging shale production. But the temporary tightness influencing the backwardation is a product of inadequate pipeline capacity between surging Permian Basin production and hungry USGC refiners.

Additional pipelines coming online soon are expected to alleviate this congestion and further ease backwardation.

U.S. GASOLINE STOCKS RECOVER

U.S. gasoline stocks rose 585,000 barrels to 213.27 million barrels the week ended August 15, putting them nearly flat to the five-year average, EIA data shows.

But stocks on the U.S. Atlantic Coast (USAC) -- home to the New York Harbor-delivered NYMEX RBOB contract -- rose 675,000 barrels to 58.64 million barrels, putting them almost 4.5% above the five-year average. This is up from the previous reporting period, when EIA data showed USAC stocks were just 2% above the five-year average.

Amid an otherwise sharp correction in prompt RBOB prices, perceived tightness and expectations of a recovery in demand amid summer driving season has helped to arrest the slide twice during the past two weeks.

Front-month RBOB has largely fallen since June 23, when it traded above $3.15 per gallon (/gal). But the contract briefly found support around $2.75/gal on August 6, after EIA data for that week showed USAC stocks had tightened. However, prompt RBOB again drifted lower to around $2.63/gal at the end of the week ended August 15 -- only to again rebound Monday amid expectations of tightening supply amid remaining summer demand.

September RBOB was trading 66 points higher at $2.7019/gal around 12:25 p.m. EDT, (1625 GMT).

The boost in USAC stocks likely was helped by an increase in imports, which rose 199,000 b/d to 650,000 b/d the week ended August 15, the highest since mid-June and more than double year-ago levels. Platts cFlow ship-tracking software shows there is likely more to come, with more than 13 tankers en route from Europe due to arrive within the next two weeks.

U.S. distillate stocks fell 960,000 barrels to 121.54 million barrels the week ended August 15 as implied demand** remained above 4 million b/d for the third straight week.

Combined low- and ultra-low-sulfur diesel stocks on the USGC fell 1.64 million barrels to 31.07 million barrels, putting them at a more than 22% deficit to the five-year average.

EIA continued to peg weekly U.S. distillate exports at 1.19 million b/d - in line with the more accurate, and latest, monthly data for May.
Source: Platts