U.S. commercial crude stocks are expected to have decreased 1.9 million barrels in the week ended July 17, a survey of analysts showed.The U.S. Energy Information Administration (EIA) is scheduled to release its weekly data at 10:30 am EDT (1430 GMT) Wednesday.The EIA five-year (2010-14) average shows inventories declining 1.5 million barrels for the reporting period, typical of the seasonal pattern in which stocks fall amid the summer driving season.

One factor helping draw crude oil stocks lower recently has been strong refinery activity. Crude runs averaged 16.825 million barrels per day (b/d) the week ended July 10, a record-high according to EIA data that goes back to 1982. For the week ended July 10, the refinery utilization rate -- 95.3% of operable capacity -- was 1.8 percentage points above the same reporting period a year earlier.

Refineries had a strong financial incentive to churn out supply. Gasoline futures held up well in the face of a softer crude oil market, strengthening refining margins as a result.

Culminating a two-week rally, the front-month New York Mercantile Exchange (NYMEX) reformulated blendstock for oxygenate blending (RBOB) gasoline crack against Intercontinental Exchange (ICE) Brent closed July 9 at $27.28 per barrel (/b). Prompt RBOB cracks were last higher in May 2007 at $27.33/b.
The gasoline crack eased sharply last week, closing Friday at $21.75, but still well-above the $12/b level a year ago.

Analysts expect the refinery utilization rate inched 0.1 percentage points lower to 95.2% of operable capacity.

Another statistic that will be watched is Canadian imports, which rebounded the week ended July 10 by 254,000 b/d, putting downward pressure on West Texas Intermediate (WTI) prices, analysts said.

Canadian exports to the U.S. were down in June after wildfires in Alberta dented production, but have since recovered. For the week ended July 10, Canadian imports averaged 3.019 million b/d, up 431,000 b/d from the June low.

In refinery news, Phillips 66's 139,000 b/d refining complex in Los Angeles began planned maintenance, a company spokesman said last week. Further details were not disclosed.

Gasoline stocks seen flat

U.S. gasoline stocks are expected to be unchanged last week, the analysts surveyed said.

The EIA five-year average shows gasoline inventories increasing roughly 80,000 barrels in the comparable reporting week.

With U.S. refinery production running high, gasoline stocks sat at 218 million barrels the week ended July 10, just above the five-year average for the same reporting period.

On the U.S. Atlantic Coast (USAC), home to the New York Harbor-delivered RBOB futures contract, supplies grew to 62.075 million barrels, a 6% surplus to the five-year average. That statistic had been a small deficit as recently as early June.

USAC gasoline imports helped push the region's stockpiles higher that week. The moving four-week average for USAC gasoline imports was 703,250 b/d, compared with 533,250 b/d during the same period a year earlier.

With the prompt RBOB crack weakening and cross-Atlantic freight rates rising, the arbitrage from Europe shut last week, sources said. If so, that would likely translate into fewer gasoline imports last week.

Four tankers carrying 1.3 million barrels of gasoline were scheduled to arrive on the Atlantic Coast in the next 10 days, Platts cFlow ship-tracking software showed last Friday. Earlier in July, as many as 10 ships carrying 3.5 million barrels were seen transiting the same route.

U.S. distillate stocks are expected to have increased 1.9 million barrels over the latest reporting week.

The EIA five-year average for the same reporting period shows inventories rising by the same amount.

Distillate exports tracked leaving the U.S. Gulf Coast (USGC) for Europe over the last seven days were around 395,000 mt, according to Platts cFlow ship-tracking software.

That represented a weekly slowdown, as distillate exports from the Gulf Coast to Europe were around 475,000 mt for the prior seven-day period.

Exports help lower inventories. Distillate products including diesel and gasoil typically represent the largest share of USGC product exports to Europe.

Stocks of low and ultra-low sulfur diesel (ULSD) on the Atlantic Coast continue climbing, reaching 41.5 million barrels the week ended July 10, a 48% surplus to the five-year average.

USGC stocks of low and ULSD totaled 38.3 million barrels that week, or 2.4% above the five-year average for the same reporting week.
Source: Platts