U.S. commercial crude oil stocks fell 2.07 million barrels to 360.48 million barrels during the reporting week ended August 22, U.S. Energy Information Administration (EIA) data showed.The draw found support from still-soaring crude oil runs at U.S. Gulf Coast (USGC) refineries, which continued to set record highs the week ended August 22, hitting 8.75 million b/d. That said, USGC refinery utilization rates -- which include feedstocks other than crude oil -- came off 0.5 percentage point to 96.2% of capacity. This is down from a record 96.9% of capacity the week ended August 15.

At 9.15 million barrels per day (b/d), the USGC is home to more than 50% of the nation's total refinery operable capacity.

As a result of the surge in runs, USGC crude oil stocks fell 2.12 million barrels to 189.1 million barrels, putting them nearly 4.6% above the five-year average of EIA data. Higher imports likely capped the draw, however. USGC imports rose 150,000 b/d to 3.68 million b/d the week ended August 22, but this is still 1.28 million b/d below the five-year average.

The boost was largely a result of a rebound in barrels from Venezuela, which jumped 315,000 b/d to 900,000 b/d the week ended August 22 and could have been related to the reopening of the Louisiana Offshore Oil Port (LOOP), which had been shut for a handful of days during the previous reporting week.

Imports from Saudi Arabia, meanwhile, fell 415,000 b/d to 832,000 b/d. Saudi barrels have vacillated over much of the summer, falling to the mid-800,000 b/d level one week, then rallying above 1.2 million b/d the next week.

U.S. CRUDE OIL PRODUCTION AT NEAR 28-YEAR HIGH

The surge in USGC crude oil runs outpaced a 174,000 b/d increase in U.S. imports -- which rose to 7.63 million b/d -- and a 54,000 b/d rise in U.S. production -- which hit 8.63 million b/d, the highest since the week ended October 31, 1986, when it was 8.77 million b/d.

Total U.S. crude oil runs rose 124,000 b/d to 16.54 million b/d the week ended August 22, although refinery utilization rates stayed largely flat, up 0.1 percentage point to 93.5% of capacity. Analysts surveyed Monday by Platts had been expecting a 0.8 percentage-point decline.

Crude oil stocks at Cushing, Oklahoma -- delivery point for the New York Mercantile Exchange (NYMEX) crude oil futures contract -- rose 508,000 barrels to 20.66 million barrels, largely in line with analysts' expectations.

However, the build runs counter to reports earlier in the week by Genscape, which showed Seaway flows rose by around 65,000 b/d to almost 330,000 b/d, while TransCanada's Gulf Coast Marketlink flows jumped almost 85,000 b/d to more than 256,000 b/d.

Cushing stocks built despite a 101,000 b/d jump in U.S. Midwest crude oil runs, which rose to 3.63 million b/d. Midwest crude oil stocks were largely flat, down 87,000 barrels to 86.42 million barrels.

U.S. ATLANTIC COAST (USAC) GASOLINE STOCKS FALL

U.S. gasoline stocks fell 960,000 barrels to 212.31 million barrels the week ended August 22. Analysts had been expecting a larger, 1.7 million-barrel draw.

Stocks on the USAC -- home to the New York Harbor-delivered NYMEX RBOB contract -- fell 1.09 million barrels to 57.55 million barrels. Despite the drop, USAC inventories remain well-supplied, sitting 3.2% above the five-year average.

Platts cFlow ship-tracking software shows more than 10 clean tankers en route to the region, although it is unclear how many are carrying either gasoline or blending components.

Midwest gasoline stocks, meanwhile, are more than 5.5% below the five-year average after falling 1.01 million barrels to 46.03 million barrels the week ended August 22. Stocks rose 945,000 barrels to 75.2 million barrels on the USGC, which is a key supplier to both the USAC and the Midwest.

U.S. gasoline implied demand* and production were higher the week ended August 22. Demand rose 325,000 b/d to 9.1 million b/d, putting the four-week moving average at 9.04 million b/d, still below year-ago levels.

Production, meanwhile, rebounded 362,000 b/d to 9.51 million b/d. On a four-week moving average, U.S. gasoline production is closer to 9.49 million b/d, 120,000 b/d above year-ago levels.

DISTILLATE STOCKS UP

U.S. distillate stocks rallied 1.25 million barrels to 122.79 million barrels, even as implied demand came off 357,000 b/d to 3.65 million b/d.

The build was largest on the USGC, where stocks rose 2.86 million barrels to 38.93 million barrels. Combined low- and ultra-low-sulfur diesel (ULSD) stocks rose 2.6 million barrels to 33.67 million barrels.

With low and ULSD production steady around 4.72 million b/d, the stock increase could be related to a slowdown in exports. Platts data shows the USGC-Europe diesel arbitrage** narrowed sharply the week ended August 22 despite lower freight rates, making it less attractive to ship diesel eastward.

While EIA weekly export data is just an estimate, the more accurate monthly data for May pegs exports at 1.17 million b/d. June data is set to be released Thursday.
Source: Platts