U.S. commercial crude oil stocks fell 1.925 million barrels to 453.969 million barrels in the week ended September 18, Energy Information Administration (EIA) data showed. Analysts surveyed Monday by Platts expected a 700,000-barrel decrease.

The draw occurred even though refinery activity eased last week, perhaps an early sign of the approaching autumn turnaround season.

"In coming weeks, U.S. crude oil stocks are likely to increase as a consequence of lower demand from refineries that will be undergoing seasonal refinery maintenance," BNP Paribas analysts said in a note.

Crude runs fell 310,000 barrels per day (b/d) to 16.203 million b/d. The refinery utilization rate fell 2.2 percentage points to 90.9% of operable capacity, exceeding analysts' expectation of a 0.7-percentage point decline.

By region, the biggest decrease in crude stockpiles occurred in the Midwest, where inventories fell 3 million barrels to 135.397 million barrels.

Stocks at Cushing, Oklahoma -- delivery point for the New York Mercantile Exchange (NYMEX) crude oil futures contract -- decreased 462,000 barrels to 54.042 million barrels.

The Midwest's crude imports rose and refinery activity slowed last week, suggesting downward pressure on the region's crude stocks came from elsewhere.

An uptick in crude flows from the Midwest to the Gulf Coast may have helped drain inventories, explaining the decrease of 3 million barrels from Midwest storage.

U.S. Gulf Coast (USGC) stocks built by an almost identical amount, up 2.85 million barrels to 230.528 million barrels, despite the fact USGC crude imports were lower and refinery activity almost unchanged.

Gulf Coast crude imports decreased 156,000 b/d to 2.651 million b/d, the second-lowest weekly level since 1992. USGC crude runs increased 29,000 b/d to 8.466 million b/d.

West African imports up

Crude imports decreased 13,000 b/d to 7.176 million b/d, compared with a year-to-date average of 7.3 million b/d.

By country of origin, the drop was led by Iraq, Kuwait and Mexico, which collectively saw exports to the U.S. fall 550,000 b/d.

Imports from Canada rose 236,000 b/d to 3.334 million b/d, helping offset the decline.

WAF crude imports of 368,000 b/d last week were the highest amount since last December.

The narrowing Brent/WTI crude futures spread has been one of the key factors driving the recent buying interest for Nigerian and Angolan crudes.

The front-month ICE Brent/WTI spread was mostly in a band of $2-$3 per barrel (/b) last week, its tightest range since January. Brent's premium to WTI eroded steadily from more than $7/b in mid-August to as little as $1.50/b at one point last week.

There has been increased interest from U.S. Gulf Coast refineries for Angolan crude, especially for heavier grades such as Saturno and Dalia, to be used for blending, sources said.

Refining margins also show how incentives have emerged to purchase West African crudes.

Cracking margins on the U.S. Atlantic Coast (USAC) using Nigerian Bonny Light averaged $8.73/b last week, versus only 78 cents/b for North Dakota Bakken. In fact, Bakken margins even briefly turned negative last 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.

Crude differentials, like the Brent-WTI spread, have adjusted to change trade flows because the U.S. has more storage than the rest of the world and U.S. inland storage is a cheaper option than floating storage, Energy Aspects said in a note this week.

Tankers carrying crude from the North Sea, West Africa and Latin America should be arriving in the U.S. in the coming weeks, the consultancy said.

Gasoline stocks build

U.S. gasoline stocks increased 1.369 million barrels last week to 218.756 million barrels. Analysts surveyed by Platts were looking for an increase of 450,000 barrels.

Stocks on the Atlantic Coast -- home to the New York Harbor-delivered NYMEX reformulated blend stock for oxygenate blending (RBOB) futures contract -- decreased 2.548 million barrels.

At 58.232 million barrels, USAC stocks were 6.9% above where they stood one year ago. The region's gasoline imports decreased 157,000 b/d to 431,000 b/d, helping inventories draw.

Implied* demand rose 232,000 b/d last week to 9.215 million b/d. Distillate stocks decreased 2.088 last week to 151.875 million barrels, compared with analysts' expectation of a 1.25-million barrel build.

Gulf Coast stocks of low and ultra-low sulfur diesel decreased 2.704 million barrels to 39.030 million barrels, a deficit of 1.2% to the five-year average for the same reporting period.

Atlantic Coast stocks of low and ultra-low sulfur diesel appeared more plentiful, sitting 71.6% above the five-year average for the same reporting period after increasing 1.3 million barrels to 50.552 million barrels.
Source: Platts