U.S. commercial crude oil stocks are expected to have fallen 1.25 million barrels during the reporting week ended December 26, a Platts analysis and survey of oil analysts showed.The U.S. Energy Information Administration (EIA) is scheduled to release its weekly data at 10:30 a.m. EST (1530 GMT) Wednesday.

The EIA five-year average shows inventories falling 3.7 million barrels this reporting week. Stocks tend to decrease toward the end of the calendar year, as oil companies try to minimize the amount of crude oil held in storage for tax-reporting purposes, analysts said.

The plunge in oil prices is raising questions about whether oil companies will still pursue that strategy, or perhaps opt for a different policy altogether.

Some companies might be trying to accumulate crude oil to take advantage of prices for prompt delivery being less expensive than for later delivery, analysts said.

This term structure, known as contango*, means it can be profitable to buy and sell crude oil, taking advantage of the price difference in the futures market.

U.S. crude oil stocks are at healthy levels compared with recent historical standards. At 387 million barrels on December 19, crude oil stocks were 11.6% above the EIA five-year average (2009-2013) for the same reporting week.

Analysts expect the U.S. refinery utilization rate to be unchanged at 93.5% of operable capacity. For the same reporting period one year earlier, refineries operated at 92.4% of operable capacity.

With crude oil runs expected to be flat, imports could play an important role in determining weekly stockpile movements.

One question will be whether imports can sustain relatively high levels for two weeks in a row. For the week ended December 19, imports rose more than 1 million barrels per day (b/d) to almost to 8.3 million b/d, the highest since September 2013.

GASOLINE STOCKS UP

U.S. gasoline stocks likely were up 1.17 million barrels, according to the analysts surveyed. The EIA five-year average shows inventories rising 642,000 barrels in the comparable reporting week.

With refineries churning out refined products, demand has proved insufficient to digest the extra supplies, causing gasoline stocks to build.

Gasoline stocks have increased for seven weeks in a row. During that period, the inventory has risen about 24 million barrels and flipped from a deficit to a surplus relative to the EIA five-year average.

At 226 million barrels the week ended December 19, U.S. gasoline stocks were 3.3% above the EIA five-year average.

In refinery news, Suncor Energy said it had completed an 11-week maintenance program at its 137,000 b/d Montreal refinery the week ended December 26.

U.S. distillate stocks are expected to increase 1.08 million barrels the week ended December 26.
The EIA five-year average shows U.S. distillates rising 2.2 million barrels for the same reporting period.

Exports provide an additional outlet for supplies. However, U.S. distillate exports to Europe fell to 260,000 metric tonnes (mt) the week ended December 26, down from 350,000 mt in the previous week, data from Platts cFlow ship-tracking software showed.

*Contango is the industry vernacular for the condition whereby prices for nearby delivery are lower than prices for future-month delivery.
Source: Platts