A steady drawdown in U.S. commercial crude oil stocks is expected to have continued the week ended January 3, a Platts analysis and survey of oil analysts showed Tuesday. The U.S. Energy Information Administration (EIA) is scheduled to release its weekly data at 10:30 a.m. EST (1500 GMT) Wednesday.

Analysts surveyed expect crude oil stocks to have fallen an additional 3.3 million barrels during the week ended January 3. This comes on the heels of a more than 30 million-barrel drawdown during the previous five reporting weeks.

U.S. crude oil stocks were 360.57 million barrels the week ended December 27, down from 391.42 million barrels the week ended November 22, EIA data shows.

Despite the fall, stocks remain nearly 8% above the EIA five-year average.

Tradition Energy analyst Gene McGillian said Monday the drastic reduction in U.S. commercial crude oil stocks during the last five weeks was likely year-end tax marking, rather than any solid improvement in demand.

On a four-week moving average, EIA data shows total U.S. implied demand* for crude oil at 19.76 million barrels per day (b/d) the week ended December 27, down slightly from just over 20 million b/d the week prior. This is up from a year ago, when the four-week moving average the last two reporting weeks was 18.9-19.1 million b/d.

McGillian said that he expects crude oil stocks to "magically" reappear during the first six or so weeks of 2014.

That would be consistent with seasonal norms. The EIA five-year average shows U.S. crude oil stocks have typically risen close to 14 million barrels during the first six weeks of the year.

However, U.S. crude oil runs are much higher than they were a year ago around this time, which will likely keep pressure on crude oil stocks. EIA data shows U.S. crude oil runs were 16.25 million b/d the week ended December 27, with refinery utilization rates at 92.4% of capacity. Last end-December, crude oil runs were closer to 15.3 million b/d, with rates around 90.4% of capacity.

Analysts surveyed expect U.S. refinery utilization the week ended January 3 increased another 0.3 percentage point, despite a downed crude oil unit in turnaround at Monroe Energy's 185,000 b/d Trainer, Pennsylvania, refinery, as well as a downed fluid catalytic cracker at Motiva Enterprises’ 600,000 b/d Port Arthur, Texas, refinery.

Meanwhile, U.S. distillate stocks are expected to have increased 1.9 million barrels the week ended January 3, even amid increasingly cold weather across much of the U.S. An increase of this size is largely in line with the week-over-week change in the EIA five-year average.

U.S. gasoline stocks are expected to have increased 2 million barrels the week ended January 3, which is well under the possible 4.6 million-barrel build reflected in the five-year average.
Source: Platts