U.S. commercial crude oil stocks are expected to have declined a moderate 300,000 barrels the week ended May 16 as some shut-ins of units at U.S. refiners was countered by high refinery run rates, a Platts poll of analysts showed.The U.S. Energy Information Administration (EIA) is scheduled to release its weekly data at 10:30 a.m. EDT (1530 GMT) Wednesday.

Phillips 66 shut its No. 40 fluid catalytic cracker (FCC) at the joint venture Borger refinery for maintenance from May 16 until June 9, according to a filing the week ended May 16. The Borger refinery already shut its other No. 29 FCC May 14 for maintenance that is expected to end Wednesday.

Also the week ended May 16, Tesoro shut an unspecified "major unit" at its 166,000 barrels per day (b/d) Golden Eagle refinery near Oakland, California.

Still, analysts are expecting a 0.5 percentage-point increase in U.S. refinery utilization rates to 89.3% of capacity, based on EIA data.

Two weeks ago, Philadelphia Energy Solutions -- the largest refinery on the U.S. East Coast -- restarted a unifier and a reformer in the Point Breeze section of the 330,000 b/d plant in Philadelphia.

Carl Larry, president of Oil Outlooks, noted the difficulty in predicting moves in crude oil stocks, saying "everything that we could count on the past few years is out the window."

"What was once 'seasonality' is now as different as Daylight Savings Time. Refineries are running higher despite an unseasonably long maintenance season. There's also a major difference in imports as well as the high flow of crude coming in from Cushing," he said. "Throw those last two factors in and that's where we're coming up with a draw. It's about backing out imports this week and relying on the cheaper crude from Cushing."

Cushing, Oklahoma, crude oil stocks, according to some analysts, could drop by as much as 1.5 million barrels. But some estimates called for a 500,000 barrel build.

The downtrend at Cushing since TransCanada opened the 700,000 b/d Cushing Marketlink pipeline on January 22 has been impressive, said Tim Evans, commodity analyst at Citi Futures Perspective. Inventories there fell in 14 of the last 15 weeks by 18.4 million barrels, sinking to 23.4 million barrels for the May 9 reporting week -- the lowest level in more than five years.

"While this makes it clear that there is no longer either a glut or a bottleneck at Cushing, it doesn't mean that the U.S. market is tight," Evans said, referring to the continued upward movement of New York Mercantile Exchange (NYMEX) crude oil futures as Cushing stocks decline.

"In fact, inventories just at the other end of the pipeline, in the Gulf Coast, are at a record high," Evans said.

With total U.S. commercial stocks also high, crude oil could easily back up into Cushing if refiners were to decide they don't need to keep buying only if it means more inventories, Evans said.

U.S. GASOLINE STOCKS TO RISE, DISTILLATE DOWN

U.S. gasoline stocks are expected to have risen 150,000 barrels the week ended May 16. Some analysts, however, expect stocks to fall ahead of the U.S. Memorial Day holiday as demand is expected to pick up.

U.S. gasoline stocks fell 772,000 barrels for the May 9 reporting week as demand popped above the 9 million b/d mark. At the same time, fuel production rose 614,000 b/d to 9.61 million b/d. That put gasoline production more than 670,000 b/d above year-ago levels. But

Evans noted that although the notion is that the summer driving season starts on Memorial Day, demand numbers are usually relatively soft in the first half of June.

"The real period of peak offtake is much shorter, typically only beginning just ahead of July 4 and running through the first week of September.”

U.S. distillate stocks are expected to have declined 250,000 barrels the week ended May 16.

"We've been watching the supply and demand in this area closely and it's come to us that the tipping point for supply builds and production is 5 million b/d. We think that the higher refinery production is going to lean its yield to gasoline last week and that's going to hurt distillate," Larry said.
Source: Platts