Soaring crude oil inputs at U.S. refineries helped to push combined U.S. gasoline and distillate stocks 13.78 million barrels higher the week ended December 5, U.S. Energy Information Administration (EIA) oil data showed.Despite the higher demand from refiners, the buildup in U.S. product stocks weighed on the oil complex, helping to drag prompt New York Mercantile Exchange (NYMEX) and IntercontinentialExchange (ICE) Brent crude oil futures more than $3 per barrel (/b) lower in the wake of the release of the EIA data.

Net inputs to U.S. refineries rose 271,000 barrels per day (b/d) to a record 16.627 million b/d during the week ended December 5, eclipsing the 16.626 million b/d seen the week ended July 11.

The increase helped to bring U.S. refinery utilization rates 2 percentage points higher to 95.4% of capacity -- nearly 3 percentage points higher than at this time last year. Analysts surveyed Monday by Platts, however, had been expecting runs to have remained flat.

Still-strong refining margins on the U.S. Gulf Coast (USGC) are likely behind the build in product stocks. The 30-day moving average for the Louisiana Light Sweet cracking margin is currently $8.50/b, although they faltered the week ended December 5, averaging just $4.85/b.

Platts margin data reflects the difference between a crude oil's netback and its spot price. Netbacks are based on crude oil yields, which are calculated by applying Platts product price assessments to yield formulas designed by Turner, Mason & Co.

As a result, the soaring runs helped to push U.S. gasoline stocks 8.2 million barrels higher to 216.76 million barrels the week ended December 5, while distillate stocks rose 5.58 million barrels to 121.75 million barrels.

The details of the build in gasoline stocks drove prompt NYMEX RBOB futures to an intraday low of $1.6300 per gallon Wednesday following the EIA release, even as inventories remain slightly below the five-year average.

Stocks on the U.S. Atlantic Coast (USAC) -- home to the New York Harbor-delivered RBOB contract -- rose 2.21 million barrels to 52.36 million barrels. Yet stock here too remains relatively tight, at a more than 5% deficit to the five-year average.

The build is mostly centered on the USGC, where gasoline stocks the week ended December 5 rose 2.83 million barrels to 81.35 million barrels. Stocks in this region are almost 9.3% above the five-year average.

Sharply lower implied demand* likely helped boost inventories, as production fell 424,000 b/d week over week to 9.17 million b/d. U.S. gasoline supplies fell 876,000 b/d to 8.55 million b/d the week ended December 5.

Meanwhile, the rise in U.S. distillate stocks was led by a 2.76 million-barrel build in USGC low- and ultra-low-sulfur diesel stocks, which rose to 35.29 million barrels. This puts stocks in the region near parity with the five-year average.

Prior to this, so far in 2014, combined stocks on the USGC had averaged a near 12% deficit to the five-year average, which largely reflected the robust export market for U.S. distillates in both Europe and Latin America.

USAC combined stocks rose 1.64 million barrels to 28.34 million barrels, putting inventories there at a near 7% surplus to the five-year average, signaling more-than-adequate supply for the region as winter demand picks up.

Implied demand for U.S. distillates, however, fell 108,000 b/d to 3.47 million b/d the week ended December 5. This time last year the same measure was just 3.3 million b/d.

U.S. CRUDE OIL STOCKS RISE

U.S. commercial crude oil stocks rose 1.45 million barrels to 380.79 million barrels the week ended December 5, bringing inventories to a 7.33% surplus to the five-year average.

The build was largest on the U.S. West Coast (USWC), where stocks rose 1.34 million barrels to 54.27 million barrels. USWC imports rallied 360,000 b/d to 1.16 million b/d.

USGC crude oil stocks rose 537,000 barrels to 193.62 million barrels amid a 489,000 b/d jump in imports, which rose to 3.57 million b/d. The rebound in imports likely softened the impact of the record crude oil runs in the region.

Stocks at Cushing, Oklahoma -- delivery point for the NYMEX crude oil futures contract -- rose 1.02 million barrels to 24.91 million barrels, putting them nearly 16 million barrels below year-ago levels.

Despite the comparatively tight supply situation at Cushing, NYMEX crude oil futures remain firmly in contango**. NYMEX January crude oil was trading at a discount of 18 cents per barrel to the February contract during midday U.S. trading.

*Implied demand is the amount of product that moves through the US distribution system, not actual end consumption.

**Contango is the industry vernacular for the condition whereby prices for nearby delivery are lower than prices for future-month delivery.
Source: Platts