U.S. commercial crude oil stocks likely fell around 1.5 million barrels during the reporting week ended May 24, according to a Platts analysis and a survey of oil analysts. The U.S. Energy Information Administration (EIA) is scheduled to release its weekly data at 11:00 a.m. EDT (1500 GMT) Thursday. Both data sets are delayed by one day due to the U.S. Memorial Day holiday Monday.
EIA data shows U.S. crude stocks typically draw at this point in the year, and at 394.552 million barrels for the reporting week ended May 17, stocks are amply supplied, sitting at a surplus of more than 9% to the EIA five-year average.
The five-year average shows a 2.2 million-barrel decline is typical for the reporting week ended May 24, which saw two U.S. refineries bring sizable unit capacity back into production, which would make a case for a larger draw in crude stocks.
U.S. refinery utilization rates are expected to increase 0.6 percentage point. A fluid catalytic cracker (FCC), a hydrodesulfurization and a benzene unit at Tesoro's 170,000 barrels per day (b/d) Martinez, California, refinery came back online May 18, according to a company filing. A 32,500 b/d FCC at Western Refining's 122,000 b/d El Paso, Texas, refinery also came back online during the week ended May 24.
However, the wild card lately has been the volatility in crude oil imports. EIA data shows U.S. imports averaged 8.1 million b/d for the reporting week ended May 17, up from around 7.6 million b/d for the two reporting weeks prior. Over the past seven months, U.S. crude imports have vacillated between 7-8 million b/d, although they have trended lower over that time period.
Imports are about 1 million b/d below the EIA five-year average.
"Imports will continue to suffer this week and more than likely into the rest of the summer," Oil Outlooks President Carl Larry said.
U.S. gasoline stocks are expected to have fallen 800,000 barrels during the week ended May 24, in line with a decline shown by the week-on-week change in the EIA five-year average.
However, stocks have increased over the previous two reporting periods. At 220.68 million barrels, U.S. gasoline stocks are a comfortable 5.5% above the EIA five-year average.
"I can't believe that we will [see another build]," said Larry, who expects gasoline imports to back off slightly.
Gasoline imports averaged a three-week high of 1.041 million b/d for most recent reporting period, and the five-year average of EIA data suggests imports should have remained stable at around 1 million b/d during the week ended May 24 and into the next reporting week.
However, implied demand* for gasoline, which averaged 8.79 million b/d for the most recent reporting period, likely rose during the week ended May 24 due to the Memorial Day holiday, which typically ushers in a period of high demand throughout the U.S. summer.
U.S. distillate stocks are expected to have fallen 600,000 barrels, in line with the week-on-week change in the EIA five-year average.
At 118.812 million barrels, U.S. distillate stocks are more than 11% below the EIA five-year average. The five-year average also shows that U.S. distillate stocks often begin to build around this point ahead of the U.S. summer.
* Implied demand is the amount of product that moves through the U.S. distribution system, not actual end consumption.
Source: Platts