US crude oil stocks fell for the first time in 12 weeks during the week that ended June 1, down 1 million barrels and led by a draw on the West Coast, US Energy Information Administration (EIA) data showed Wednesday. At 384.6 million barrels, US crude inventories are 36.414 million barrels, or 10.5%, greater than the five-year average. That's up from a 1.75% surplus in mid-March. The crude stock draw was in line with analysts' expectations and
 was near figures reported Tuesday by the American Petroleum Institute, which showed a 1.765-million-barrel crude stock decline last week.
A build in crude stocks in the Midwest of 2.8 million barrels, including a 1million-barrel build at Cushing, Oklahoma – home of the New York Mercantile Exchange’s (NYMEX) crude oil futures contracts – EIA data showed. But the Cushing crude oil build wasn't enough to fully offset a 3.8-million-barrel draw on the West Coast.
US refiners boosted utilization by 1.9 percentage points to 91% of capacity, with the US Atlantic Coast posting the largest increase of 5.2 percentage points. On the Gulf Coast, refiners upped run rates by 3.1 percentage points, while in the Midwest, run rates fell by 2.1 percentage points.
US imports of crude declined 99,000 barrels per day (b/d) to 8.957 million b/d last week and were about 469,000 b/d less than the five-year average, the EIA data showed. For the most part, US crude imports have been trending less than the five-year average since 2008.
At the same time, US crude oil production has been on the rise and was at 6.245 million b/d last week – its highest level since the week ending February 5, 1999.
Crude oil production averaged around 5 million b/d in January 2008 and increased to around 5.8 million b/d by the end of 2011. Since the start of the year, crude oil production has increased by some 401,000 b/d.
Analyst Torbjorn Kjus of DNB Markets called the EIA data "bearish" for the market with weak demand and large product stock draws.
"Total US oil demand came in at only 18.2 million b/d and both gasoline demand and distillate demand was very weak," Kjus said in a note. "Normally the crude market in the US turns into deficit in May and then we see crude stocks drawing until September, when again the refineries often plan maintenance activities."
Total product supplied declined 95,000 b/d last week to 18.226 million b/d, according to the EIA data.
This year, Kjus noted, US crude stocks have risen to record levels into June as domestic production has climbed above 6 million b/d.
"We do, however, for the coming 2-3 months expect a gradual drawdown in US crude stocks as refineries continue their seasonal ramp-up at the same time as crude imports fall back," he said.
Recently, in the Gulf Coast Light Louisiana Sweet (LLS) market, Kjus said, prices have been falling "to unusual fairly large negative premium versus Brent. This is a warning signal for lower imports of crude into the U.S. [Gulf of Mexico] going forward."
US PRODUCT STOCKS UP AS PRODUCTION GROWS
In products, total US gasoline stocks grew by 3.346 million barrels to 203.525 million barrels last week, according to the EIA data. This far outpaced analysts’ expectations, which projected a 500,000-barrel rise in gasoline stocks, according to a survey of analysts conducted by Platts Monday.
US gasoline stocks increased in aggregate as stocks in the Atlantic Coast grew 956,000 barrels to 54.787 million barrels and Gulf Coast stocks grew 1.772 million barrels to 69.819 million barrels. West Coast gasoline stocks grew by 1.165 million barrels to 25.901 million barrels.
This was offset by a 638,000-barrel draw in Midwest gasoline stocks, pushing the regions gasoline stocks to its lowest level since the week ending November 25.
U.S. net production of finished motor gasoline decreased by 198,000 b/d to 8.825 million b/d, with declines in each region except the Rocky Mountains. Atlantic Coast net production of finished motor gasoline decreased by the largest amount, down 150,000 b/d to 2.858 million b/d.
Gulf Coast net production of gasoline decreased 15,000 b/d to 1.979 million b/d.
On a four-week moving average, gasoline product supplied at 8.88 million b/d was down just 0.44% year on year. That's up from a 6% deficit in mid-March.
Imports of gasoline increased by 40,000 b/d to 836,000 b/d last week, despite a drop in imports to the Atlantic Coast, which fell 22,000 b/d to 742,000 b/d.
On a four-week moving average, gasoline imports at 721,000 b/d were down 39% year-on-year.
US distillate stocks grew last week by 2.253 million barrels to 120.037 million barrels, rising in all regions save the Gulf Coast, where distillate stocks fell 443,000 barrels to 35.807 million barrels.
The rise comes largely from a 2.306 million barrel increase in ultra low sulfur diesel (ULSD) stocks, which grew across all regions. ULSD stocks grew most on the West Coast, up 953,000 barrels to 9.920 million barrels.
Source: Platts