U.S. commercial crude oil inventories were down for the fourth consecutive week, falling 4.7 million barrels for the week ended December 20, according to data just released by the U.S. Energy Information Administration (EIA). The decline was driven by a drop in imports and an increased refinery run rate, the latter at a five-month high, according to EIA. Analysts polled by Platts were anticipating a 2.3-million-barrel decline in stocks.

The release of the data was delayed by two days because of the government closure due to the Christmas holiday.

Crude oil inventories have fallen more than 23 million barrels between November 22 and December 20. Despite the rapid decline, at 367.6 million barrels for the week ended December 20, U.S. crude oil stocks remain at a surplus to the EIA five-year average. But that surplus narrowed to 9.2% last week from more than 13% five weeks earlier.

The drawdown in stocks was expected, given the favorable margins for U.S. refiners. The cracking margin for Light Louisiana Sweet (LLS) crude in the U.S. Gulf Coast region climbed $1.45 to average $12.43 per barrel (/b) last week. The cracking margin for West Texas Intermediate crude climbed $3.25 to average $11.44/b. The Mars crude coking margin edged up 92 cents to average $8.60/b.

U.S. refinery run rates increased 1.2 percentage points to 92.7% of capacity last week, marking the highest run rate since the week ended July 12.

While run rates rose, Platts data showed the 240,000 barrel-per-day (b/d) Motiva refinery in Norco, Louisiana, underwent planned maintenance last week. Additionally, a 51,500 b/d reformer at Citgo's Corpus Christi, Texas, refinery was shut for repairs last week following a fire. The outages were offset partially by the return of a reformer and a hydrocracker at Chevron's 330,000 b/d Pascagoula, Mississippi refinery.

In the U.S. Gulf Coast, refiners were running at 95.6% of capacity, up 2.6 percentage points from the prior week and about 1.8 percentage points higher than the same week in 2012.

At the same time, imports to the Gulf Coast were down 482,000 b/d to 3.37 million b/d for the week ended December 20. Overall, imports to the U.S. fell 197,000 b/d to 7.54 million b/d, led by a drop in Saudi Arabian imports of 291,000 b/d to 1.61 million b/d. Canadian imports also declined for the latest reporting week, down 192,000 b/d to 2.59 million b/d.

U.S. Gulf Coast crude oil inventories fell 5.2 million barrels to 176.6 million barrels. This is approximately 9.5% below the EIA five-year average. At the New York Mercantile Exchange oil futures contract delivery hub -- Cushing, Oklahoma -- crude stocks fell 400,000 barrels to 40.2 million barrels last week.

U.S. GASOLINE PRODUCTION AT RECORD HIGH

U.S. gasoline production hit a record high of 9.715 million b/d for the week ended December 20. This is up 404,000 b/d from the week prior.

Adjusted net output of finished motor gasoline from refiners and blenders has increased four out of the last five weeks and has now topped the high of 9.596 million b/d for the week ended July 5. The EIA has tracked the statistic since 1982.

Gulf Coast refiners and blenders boosted production by 166,000 b/d to 2.25 million b/d last week. In the Midwest, production set a record at 2.707 million b/d, topping the 2.573 million b/d in the reporting week ended December 6.

As Platts reported, BP brought online a 102,000 b/d coker at its Whiting, Indiana refinery in November, with the unit expected to reach full capacity by early 2014. The coker was designed to allow BP to make increased use of heavy Canadian crude to produce higher-value lighter products.

Despite a production increase, U.S. stocks of gasoline were fairly flat, dropping 600,000 barrels to 219.9 million barrels last week. The decline was counter to analyst expectations of a 1.2 million-barrel build.

Imports of gasoline fell 113,000 b/d to 486,000 b/d last week and were well below the EIA five-year average of 800,000 b/d.

Implied* demand for finished gasoline was steadily above the 9 million b/d mark last week, up 160,000 b/d from the prior week's 9.02 million b/d. Implied demand is now 568,000 b/d above the same reporting week in 2012.

On the U.S. Atlantic Coast (USAC) -- home of the New York delivery point for NYMEX RBOB -- gasoline inventories were at 56.23 million barrels last week, down 300,000 barrels from the prior week. The surplus of USAC gasoline stocks continued to narrow, moving to just less than 1% to the EIA five-year average, which compares to a 13.6% surplus to the five-year average at the start of October.

U.S. distillate stocks were down 2 million barrels to 114.1 million barrels last week, with the bulk of the decline concentrated in the Atlantic Coast. Stocks in the region fell 1.8 million barrels. Midwest distillate stocks were down 1.1 million barrels last week, while in the Gulf Coast, stocks rose 1.9 million barrels. Analysts were expecting a 500,000-barrel draw in distillate stocks.

Inventories of ultra-low sulfur diesel fell 2.4 million barrels last week.
Source: Platts