The U.S. Energy Information Administration (EIA) is scheduled to release its weekly data at 10:30 a.m. EDT (1430 GMT) Wednesday.The draw is likely to come despite soaring domestic production, which came in at a multi-year high of 8.51 million barrels per day (b/d) during the reporting week ended July 4. But crude oil runs at U.S. refineries are also strong. At 16.25 million b/d, runs are at their highest level since hitting 16.34 million b/d in June 2005.

Analysts were divided about whether or not this strength would continue into last week. That said, on average, analysts expect runs to have come off by around 0.5 percentage point.

But Platts data shows a few U.S. refineries likely boosted runs the week ended July 11. Alon USA hiked rates at its 70,000 b/d Big Spring, Texas, refinery after work on a vacuum tower was completed. And Tesoro restarted a major unit at its 166,000 b/d Golden Eagle refinery in Martinez, California. Also in California, Chevron completed turnaround work at its 290,000 b/d El Segundo refinery.

Meanwhile, a crude oil unit and gasoline-making fluid catalytic cracking unit at Monroe Energy's 185,000 b/d refinery at Trainer, Pennsylvania, were shut the week ended July 11 following a fire. And Flint Hills Resources shut its diesel hydrotreater-kerosene unit at its 288,126 b/d Corpus Christi, Texas, refinery.

Citgo also reported an issue at its 165,000 b/d Corpus Christi refinery after a small hole developed in a reheater.

U.S. Gulf Coast Refining Margins

Crude oil stocks are unlikely to get much support from imports, aside from steady flows from both Canada and Saudi Arabia. U.S. crude oil imports at 7.29 million b/d for the week ended July 4 are 240,000 b/d below year-ago levels and nearly 17% below the five-year average, EIA data shows.

Weekly EIA data shows imports from Nigeria were zero during five separate weeks since the beginning of the year, with a weekly high at 242,000 b/d coming in late April.

The propensity for domestic grades over imports can be borne out looking at U.S. Gulf Coast (USGC) cracking margins. The week ended July 11 cracking margins for Louisiana Light Sweet averaged more than $12 per barrel (/b), compared to just $4.38/b for imported Nigerian Brass River.

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

Margin data also points to strong Canadian economics. USGC coking margins for Western Canadian Select averaged almost $16/b the week ended July 11, compared to just $5.51/b for Angolan Cabinda. That said, West Texas Sour coking margins outperformed all, averaging nearly $19/b the week ended July 11.

Product Stocks Expected to Build

A relatively balanced U.S. gasoline supply picture is expected to have held steady the week ended July 11, with analysts looking for a 1.2 million-barrel build. Stocks at 214.32 million barrels the week ended July 4 are 0.13 percent below the EIA five-year average.

But stocks on the U.S. Atlantic Coast (USAC) are ample at nearly 62 million barrels. This is slightly below year-ago levels, but almost 8 percent above the five-year average of EIA data.

The USAC is home to the New York Harbor-delivered New York Mercantile Exchange (NYMEX) RBOB contract. Front-month RBOB was around $2.92 per gallon (/gal) during early afternoon trading Monday, but was nearly $3.10/gal around this time last year, just prior to hitting its summertime peak of around $3.16/gal on July 19, 2013.

U.S. distillate stocks are expected to have risen 2 million barrels the week ended July 11, according to analysts surveyed. Although supply at nearly 122 million barrels appears tight -- more than 13% below the five-year average -- high production and steady demand likely point toward higher exports.

Total U.S. distillate production was more than 5 million b/d the week ended July 4 -- for the first time in 5 weeks -- and most of that likely came from USGC refiners. Implied demand* for U.S. distillates, meanwhile, was comparatively low at 3.97 million b/d.

Weekly EIA estimates have U.S. distillate exports pegged around 1.15 million b/d over the past three reporting weeks. This is up from the sub-1 million b/d weekly totals for the prior eight reporting weeks.

Platts freight assessments -- which can serve as a proxy for ex-USGC product export activity -- show clean tanker rates for a USGC-Europe route, basis 38,000 metric tonnes, have strengthened from June into July.

Platts assessed the route at Worldscale (w)** 120 Monday, which is down from a recent high of w150 seen in late-June, but well up from the low w60s seen earlier that month.

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

**Worldscale freight rates are used to price the cost of shipping crude or refined products from one port to another by tanker.

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

**Worldscale freight rates are used to price the cost of shipping crude or refined products from one port to another by tanker.
Source: Platts