U.S. gasoline stocks jumped more than anticipated during the week that ended November 23, up by nearly 4 million barrels, as product continued to move to the U.S. Atlantic Coast via pipeline and Jones Act carriers following disruptions from Hurricane Sandy, U.S. Energy Information Administration (EIA) data Wednesday showed. An uptick in total refinery runs also added to the increase in U.S. gasoline stocks.
At 204.255 million barrels, gasoline stocks for the week ending November 23 were at a 2-million-barrel deficit to the five-year average.
During the same reporting week in 2011, the deficit to the five-year average was around 4.2 million barrels.
On the U.S. Atlantic Coast - home of the New York delivery point for RBOB futures - gasoline stocks jumped 1.3 million barrels. That came despite a 1.8-percentage-point drop in regional refinery runs and substantial 139,000-barrel-per-day (b/d) decline in imports to 419,000 b/d.
Also, implied gasoline demand* plunged 471,000 b/d to 8.427 million b/d last week, the EIA data showed. Demand is about 342,000 b/d lower than the same reporting week last year.
The EIA put operable capacity in the Atlantic Coast at 1.293 million b/d last week. However, the EIA data did not take into account the return of Phillips 66's 238,000 b/d Bayway, New Jersey, refinery, which returned to normal operations Tuesday.
James Beck, lead analyst for the EIA's weekly petroleum supply team, said the disruption to Northeast refiners and terminals due to Hurricane Sandy led to a back log of gasoline moving north from the U.S. Gulf Coast.
"We are seeing somewhat unusual movement to replace [the backlog] after the power has been restored to the Northeast through pipeline movements and also the Jones Act waiver," Beck said, referring to the November 2 temporarily lifting of the U.S. Jones Act, which allowed foreign-flagged vessels to move products between U.S. ports.
The movement of Jones Act carriers from the Gulf Coast to the Atlantic Coast, even if done by foreign-flagged vessels, would not be considered imports, Beck said.
Analysts polled by Platts on Monday expected U.S. gasoline stocks to rise by one million barrels. Data released late Tuesday by the American Petroleum Institute pegged the rise in gasoline stocks last week at 2.3 million barrels.
Beck said the movement of product due to the Jones Act waiver, which allowed foreign-flagged ships to deliver fuel to the Northeast as long as they loaded cargoes by November 13 and deliver them by November 20, should have been fully included in the data for the week ending November 23.
However, there could be some spillover in the reporting that will be reflected in next week's report for the week ending November 30.
U.S. CRUDE STOCKS FALL COUNTER TO EXPECTATIONS
For U.S. crude stocks, EIA reported a 347,000-barrel draw in stocks to 374.123 million barrels last week, counter to analysts' expectations of a 500,000-barrel increase.
U.S. refiners increased runs by 1.1 percentage points to 88.6% of capacity. At the same time, imports of crude to the U.S. rose 350,000 b/d to 8.118 million b/d.
Imports of Canadian crude, most of which head into the Midwest, fell 270,000 b/d to 1.84 million b/d and imports of Nigerian crude climbed 360,000 b/d to 579,000 b/d.
Meanwhile, imports of Mexican crude were up 344,000 b/d at 1.188 million b/d and imports of Saudi Arabian crude climbed 110,000 b/d to 1.287 million b/d.
Oil markets analyst Torbjorn Kjus of DNB Bank said U.S. crude oil imports continue to track significantly lower than last year, noting that total imports were down 600,000 b/d compared to the same week in 2011, on a 4-week moving average basis.
"The key reason being that U.S. crude production is up an absolutely astonishing 0.9 million b/d (using the weekly data) versus last year," Kjus said in a note.
U.S. crude stocks were about 40.5 million barrels, or roughly 12.1%, above the five-year average.
In the Midwest, crude stocks fell 900,000 barrels but rose 100,000 barrels in the Gulf Coast.
In distillates, stocks declined a more than expected 800,000 barrels last week to 112.042 million barrels. Analysts had estimated a 150,000-barrel draw in distillates.
Analysts have noted that distillate stocks have not built significantly, even with higher refinery run rates in the summer, since the U.S. is still exporting a lot product.
Distillate stocks were about 22%, or 32 million barrels, below the five-year average as of the week ending November 23.
* Implied demand is the amount of product that moves through the U.S. distribution system, not actual end consumption.
Source: Platts