Platts - U.S. commercial crude oil stocks are expected to have risen 1.9 million barrels for the reporting week ended August 21, a Platts survey of analysts showed. U.S. Energy Information Administration (EIA) data is due to be released on Wednesday. The expectation follows a build of 2.6 million barrels for the week ended August 14, which caught many analysts off guard.

The loss of a 250,000 barrels per day (b/d) crude oil distillation unit at BP's Whiting, Indiana, refinery has weighed on analysts' expectations of crude oil stocks. A closure of that size would could force as much as 1.75 million barrels of oil into storage tanks at Cushing, Oklahoma, or back into Canada each week.

More refineries entered planned turnarounds last week, with Marathon's 212,000 b/d refinery in Robinson, Illinois, creating another hole in demand in the Midwest.

Analysts expect refinery utilization rates to have fallen by 1 percentage point over the past week. Rates are already down by 1 percentage point after touching a 10-year high of 96.1% of capacity for the weeks ended July 31 and August 7. The last time utilization rates were higher was the week ended July 8, 2005.

Adding to supply concerns, weakening Chinese demand could leave more barrels in the Atlantic Basin, weighing on differentials for West African grades and making them more competitive with U.S. crudes at Atlantic Coast refineries.

In fact, Irving Oil said last week it had halted imports of Bakken crude-by-rail for the time being to its 300,000 b/d Saint. John, New Brunswick, refinery in favor on waterborne imports.

Platts data shows waterborne imported grades like Angolan Cabinda held a near-$8 per barrel (/b) discount to North Dakota Bakken through June, after factoring in both West Africa-U.S. Atlantic Coast Suezmax freight rates and a $14/b cost for Bakken crude-by-rail.

Since June, Cabinda's discount to Bakken has narrowed, averaging just $4.66/b.

Despite the economics, New Brunswick imported around 30,000 b/d from North Dakota in June, according to Statistics Canada. That said, it is well below the 100,000 b/d the refinery says it imported two years ago.

With less Bakken getting run at these refineries, more barrels could be expected to wind up at Cushing, Oklahoma, the delivery point for the New York Mercantile Exchange (NYMEX) crude oil futures contract.

"The closing of the Atlantic market for Bakken crude will force increased volumes through Cushing, Oklahoma," petroleum economist Philip Verleger said in a weekly report.

While oversupply concerns have weighed on analysts, gasoline demand has remained robust, providing a critical outlet for resilient U.S. oil production.

The most recent data placed implied demand for gasoline at 9.7 million b/d, about 5% above the five-year average.

Analysts expect gasoline stocks to have fallen by 1.4 million for the week.

However, the strength of gasoline demand has caused huge stockpiles of diesel to develop, a trend that analysts predict continued last week. They expect distillate stocks to have increased by 700,000 barrels for the week.
Source: Platts