U.S. commercial crude oil stocks rose 1.91 million barrels to 490.912 million barrels in the week that ended Friday, April 24, Energy Information Administration (EIA) data showed this week.Analysts surveyed Monday expected a 1.4 million-barrel build. Crude stocks have built continuously since the week ended January 9. The weekly increase during that time has averaged 6.8 million barrels, making last week's build small by comparison.

Stocks at Cushing, Oklahoma -- delivery point for the New York Mercantile Exchange (NYMEX) futures contract -- fell 514,000 barrels to 61.686 million barrels.

The decline snapped a streak of weekly increases beginning early December, as traders took advantage of later-dated futures contracts being more expensive than near-term delivery, making Cushing storage profitable.

However, later-dated futures' premium to near-term delivery has been shrinking, eroding the ability to make money through storage.

The 12-month-out futures contract's premium averaged $6.11 per barrel (/b) last week, the smallest premium seen since late December, and compares with an average premium of $8.67/b a month earlier.

By region, the biggest draw occurred on the West Coast, where stocks fell 794,000 barrels to 58.72 million barrels. A West Coast subcategory, "Crude Oil Stocks in Transit (on Ships) from Alaska," plummeted 1.92 million barrels.

Last week saw a rare export of Alaska North Slope (ANS) crude to South Korea. The tanker Polar Endeavour, with a capacity to carry 1.017 million barrels, loaded from the Port of Valdez, Alaska, on a route to Yeosu, South Korea, carrying ANS crude, according to a market source and Platts cFlow ship-tracking software.

ANS was last shipped to South Korea in October of last year when South Korea's GS Caltex took delivery of an 800,000 barrel cargo for the first time in a decade.

ANS crude is exempt from a U.S. law that largely restricts exports of domestic oil, and typically heads to refineries in California, Washington and Hawaii.

CRUDE RUNS RISE

Refinery demand accelerated last week, with crude runs rising 118,000 b/d to 16.1 million b/d, helping mitigate the crude build.

Refineries have been processing more crude compared with year-ago levels. Crude runs averaged 16.056 million b/d the last four weeks, versus 15.721 million b/d a year ago.

The refinery utilization rate rose 0.1 percentage point to 91.3% of operable capacity. Analysts had expected the rate to increase 0.5 percentage point.

The U.S. Gulf Coast boosted its regional refinery utilization rate 1.5 percentage points to 93.7% of operable capacity, the highest level since January 2.

Gulf Coast margins for West Texas Intermediate (WTI) crude averaged $10.60/b in the week ended April 24, compared with $9.95/b the previous week.

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

Another factor helping offset the crude build was imports, which fell 319,000 b/d to 7.446 million b/d. The year-to-date average inched 6,000 b/d higher to 7.354 million b/d.

Imports from Canada, Colombia, Ecuador, Nigeria and Venezuela were down a total of 416,000 b/d.

GULF COAST ULSD STOCKS DRAW

Gulf Coast stocks of low and ultra-low sulfur diesel (ULSD) fell 2.283 million barrels to 39.617 million barrels, the biggest draw since the week ended January 23.

One possible explanation for the ULSD draw was greater exports from the Gulf Coast to Europe. After accommodating freight costs for medium-sized clean tankers on the Gulf Coast to Northwest Europe route, the arbitrage appeared to be open on average last week, Platts data showed.

The discount for delivered Gulf Coast waterborne ULSD to CIF (cost, insurance and freight) Northwest European cargoes averaged $3.32 per metric ton (/mt) last week, compared with the moving 30-day average of $3.01/mt through Tuesday.

A similar calculation also showed the arbitrage open to ship ULSD from the U.S. Gulf Coast to the Mediterranean.

The discount for delivered Gulf Coast waterborne ULSD to CIF Mediterranean cargoes averaged $3.76/mt last week, compared with the moving 30-day average of $1.24/mt through Tuesday.

Moreover, both arbitrages appeared to remain open last week despite a surge in freight rates from the Gulf Coast to Europe.

The Gulf Coast's draw was offset by changes on the Atlantic Coast, where ULSD stocks rose 2.571 million barrels to 28.046 million barrels.

Total distillate stocks fell 66,000 barrels to 129.27 million barrels, compared with analysts' expectations of a 700,000 barrel-increase.

Gasoline stocks increased 1.713 million barrels to 227.451 million barrels, versus analysts' expectations of an 80,000 barrel-increase.

Blending component stocks rose 1.636 million barrels to 200.639 million barrels, while conventional gasoline inventories increased 69,000 barrels to 26.771 million barrels.

Implied gasoline demand decreased 265,000 b/d to 8.92 million b/d, less than a 1% surplus to the EIA five-year average for the comparable reporting week.
Source: Platts