- U.S. Gulf Coast (USGC) imports rose 977,000 barrels per day (b/d) to 3.970 million b/d
- Refinery utilization fell for second consecutive week
- U.S. Atlantic Coast (USAC) diesel stocks rose amid warm temperatures
U.S. commercial crude oil stocks increased 4.801 million barrels to 490.657 million barrels in the week that ended Friday, according to U.S. Energy Information Administration (EIA) data released Wednesday. Analysts surveyed Monday by Platts were looking for a decline of 2.5 million barrels compared with the previous week.
Inventories have increased 11 of the last 12 reporting periods, refusing to budge lower despite the end of the autumn refinery maintenance season, according to a Platts analysis of the EIA data.
Greater imports have helped push crude stocks 36% above the five-year average for this time of year. Imports were up 291,000 b/d week on week to 8.312 million b/d, nearly 1 million b/d above the year-to-date average.
"When the WTI*-Brent price spread is this narrow, and the contango* for WTI pays you so much more than the contango for Brent, it's no wonder the world's excess is washing up onto our shores," according to an email response from Anthony Starkey, energy analysis manager at Platts Bentek, an analytics and forecasting unit of Platts, a leading global provider of energy and commodities information.
The January ICE Brent/WTI spread was around $2.50 per barrel (/b) to $3.50/b last week, and dipped below $1.50/b Friday on speculation the U.S. Congress will lift long-standing restrictions on U.S. crude exports.
The January Brent/WTI spread traded for as little as 60 cents/b Wednesday. A draft text of a massive U.S. government spending bill was released early Wednesday that included a provision granting U.S. oil producers complete access to the world market for the first time in 40 years.
NYMEX crude's January/June contango averaged $5.27/b last week, while Intercontinental Exchange (ICE) Brent's January/June contango averaged $3.69/b.
By country of origin, imports from Saudi Arabia remained solid at 1.398 million b/d, nearly flat week on week. Saudi imports have averaged 1.36 million b/d over the last four weeks, some 36% above the year-to-date average. Saudi Aramco has been aggressive in its bid to remain competitive with alternative grades on the USGC. Earlier this month, Saudi Aramco cut its January official selling price for crudes bound for the U.S., the fourth consecutive month that the official selling prices were lowered.
Gulf Coast imports jumped 977,000 b/d week on week to 3.970 million b/d, highest level so far this year. Imports pushed USGC stocks 8 million barrels higher to 251.081 million barrels.
In addition, USGC refinery activity slowed, also helping drive crude stocks higher. Gulf Coast refinery utilization declined 0.8 percentage point to 93.7% of operable capacity.
Stocks at Cushing, Oklahoma -- delivery point for the New York Mercantile Exchange (NYMEX) crude oil futures contract -- rose 607,000 barrels to 60.056 million barrels. Cushing's build may have been driven by Gulf Coast refiners sourcing more barrels from abroad, and therefore demanding fewer pipeline barrels from the Midwest.
U.S. crude production has also been resilient, boosting inventories. Output in the Lower 48 States rose 13,000 b/d to 8.652 million b/d, nearly identical to output in the year-ago period despite lower NYMEX crude prices.
Total refinery utilization dropped 1.2 percentage points last week to 91.9% of operable capacity. After rising for four weeks in row, refinery utilization has now fallen in the last two reporting periods.
GASOLINE, DISTILLATES BUILD
U.S. distillate stocks increased 2.563 million barrels in the week that ended Friday to 151.976 million barrels. Analysts surveyed by Platts Monday expected total U.S. distillate stocks to have risen 1.75 million barrels.
U.S. distillate production dropped 121,000 b/d to 5.107 million b/d, but the slowdown was not enough to prevent inventories from growing.
Warm temperatures across the Northeast U.S. have lowered heating oil demand, causing front-month NYMEX Ultra-Low Sulfur Diesel (ULSD) futures contracts to reach lows not seen since July 2004.
Moreover, USAC inventories were already well-supplied. Combined stocks of low and ULSD rose 1.841 million barrels last week to 54.726 million barrels, 116% above the five-year average for the same reporting period.
One reason for USAC diesel stocks rising could be Gulf Coast refiners sending more supplies there. A closed arbitrage to Europe has begun to cut into U.S. Gulf Coast diesel and gasoil exports.
Platts trade flow software cFlow on Monday showed just 255,000 metric tons (mt) of USGC refined products -- likely ULSD and/or gasoil -- left the region last week. That is down from around 385,000 mt in the week that ended November 30.
Gulf Coast combined stocks increased 628,000 barrels to 36.469 million barrels, 5.5% above the five-year average for the same time of year.
U.S. gasoline stocks rose 1.73 million barrels to 219.384 million barrels, compared with analysts' expectation of a 2.7 million-barrel rise.
Implied*** demand dropped 200,000 b/d to 9.22 million b/d, but was still 2.4% above the five-year average for the same reporting period.
On the Atlantic Coast -- home to the New York Harbor-delivered NYMEX reformulated blend stock for oxygenate blending (RBOB) futures contract -- gasoline stocks rose 1.366 million barrels to 58.726 million barrels, a 7.6% surplus to the five-year average for this time of year.
Source:
Platts