U.S. commercial crude oil stocks fell 7.2 million barrels the week ended May 16, led by a decline on the U.S. Gulf Coast (USGC) as imports to the region fell sharply, U.S. Energy Information Administration (EIA) data showed this week.Total crude oil stocks at 391.3 million barrels for the May 16 reporting week were about 4.1% above the EIA's five-year average.

The draw was much larger than analysts had expected. A Platts survey of analysts Monday showed stocks were expected to have fallen 300,000 barrels.

USGC crude oil stocks fell 5.7 million barrels the week ended May 16 to 209.99 million barrels – from a record high of 215.7 million barrels the week ended May 9. Last week's draw puts USGC crude oil stocks at a 12.2% surplus to the five-year average. By comparison, stocks were at a 1.37% surplus to the average in early February.

Crude oil stock draws of 1.1 million barrels each in the U.S. Midwest and the U.S. Atlantic Coast (USAC) regions contributed to the overall stock decline.

At the New York Mercantile Exchange (NYMEX) delivery hub at Cushing, Oklahoma, crude oil stocks fell 200,000 barrels to 23.2 million barrels the week ended May 16. That puts stocks at the hub at a 43.3% deficit to the five-year average.

However, historical data for Cushing -- delivery point for the NYMEX crude oil futures contract -- shows that stocks were at just 14.4 million barrels during the same reporting week in 2004 -- the year the EIA began tracking stocks at the hub.

On the USGC, a sharp 516,000 barrels per day (b/d) drop in crude oil imports was likely behind the stock decline. Overall, imports of crude oil fell 658,000 b/d to 6.47 million b/d the week ended May 16, led by a 706,000 b/d drop in Saudi Arabian imports. Iraqi imports fell 398,000 b/d to 93,000 b/d. The import plunge was tempered by a 253,000 b/d increase in Kuwaiti imports to 324,000 b/d and a 119,000 b/d rise in Angolan imports to 232,000 b/d.

Crude oil imports into the USAC also declined, down 272,000 b/d to 464,000 b/d. Imports to that region had been on the rise in previous weeks, reaching 878,000 b/d during the April 18 reporting week.

Refiners on the USGC lowered utilization rates by 2.3 percentage points to 88.3% of capacity the week ended May 16. The decline in total U.S. refinery utilization rates was less severe, declining just 0.1 percentage point to 88.7% of capacity, below expectations of a 0.5 percentage-point rise.

U.S. GASOLINE STOCKS UP, USAC IMPORTS NEAR 2 1/2-YEAR HIGH

U.S. gasoline stocks rose 1 million barrels to 213.4 million barrels. Analysts polled by Platts were anticipating a smaller, 150,000-barrel build in gasoline stocks.

Gasoline stocks on the USAC -- home to the New York Harbor-delivered NYMEX RBOB gasoline contract -- rose 1.3 million barrels to 56.8 million barrels as imports to the region jumped to 979,000 b/d, up 120,000 b/d.

The surge on the USAC puts imports there at their highest level since January 27, 2012.

Platts cFlow ship-tracking software had showed at least 12 clean cargoes from Northwest Europe refining centers bound for the main USAC gasoline input port at Bayonne, New Jersey, by May 18.

Platts cFlow does not identify the cargoes beyond calling them clean, refined products, but the cargoes originated at ports where refineries typically ship gasoline to the U.S.

Overall, gasoline stocks rose amid a slight dip in demand. Implied demand* for the fuel fell 17,000 b/d to 9.17 million b/d. Still, demand is 384,000 b/d above year-earlier levels.

Tim Evans, commodity analyst at Citi Futures Perspective, said that although the notion is that the summer driving season starts with Memorial Day, demand numbers are usually relatively soft in the first half of June.

"The real period of peak offtake is much shorter, typically only beginning just ahead of July 4 and running through the first week of September," Evans said.

U.S. distillate stocks rose 3.4 million barrels to 116.3 million barrels the week ended May 16, counter to expectations of a 250,000 barrel decline.

Distillate demand sank 479,000 b/d to 3.8 million b/d the week ended May 16 and down 429,000 b/d from a year earlier.

USAC combined low- and ultra-low sulfur diesel stocks were at 24.38 million barrels for the week ended May 16, a 4.6% deficit to the EIA five-year average. That's narrowed from a deficit of more than 34% nine weeks earlier. Stocks rose 357,000 barrels from the week ended May 9.

On the USGC, combined stocks were at 33.65 million barrels the week ended May 16, up 1.5 million barrels on the week. Stocks are now at a 8.2% deficit to the five-year average, down from 13.5% five weeks ago.

* Implied demand is the amount of product that moves through the U.S. distribution system, not actual end consumption.
Source: Platts