U.S. commercial crude oil stocks are expected to have fallen 1.5 million barrels during the week ended December 27 on last-minute reductions in inventories before year-end, according to a Platts analysis and a survey of analysts. The U.S. Energy Information Administration (EIA) is scheduled to release its weekly data at 11 a.m. EST (1600 GMT) Friday. The EIA data is delayed due to the New Year holiday.

"There are some thoughts that we will see another drawdown in inventories due to year-end position squaring, and also there was a closure of the Houston Ship Channel that could have impacted stocks," said Phil Flynn, senior analyst at Price Futures Group.

However, Flynn estimates that stocks are likely to have risen during the week ended December 27 by 2 million barrels as the Houston Ship Channel had reopened. The channel serves five refineries in the Houston area and three in Texas City with a combined refining capacity of 2.23 million barrels per day (b/d), about 13% of total U.S. refining capacity.

Vessel boardings in the Houston Ship Channel had been suspended due to poor visibility caused by fog, ship pilots said December 20. It reopened the following day.

"There could have been some supplies that crept in ahead of the new year as the channel opened up," Flynn said.

Crude oil stocks fell for the fourth consecutive week in the December 20 reporting week, having fallen more than 23 million barrels between November 22 and December 20.

Despite the rapid decline, at 367.6 million barrels the week ended December 20, U.S. crude oil stocks remain at a surplus to the EIA five-year average. However, that surplus narrowed to 9.2% the week ended December 27 from more than 13% five weeks earlier.

Flynn said expectations are for crude oil stocks to build in the new year as refinery utilization rates remain at high levels.

U.S. refinery run rates soared to 92.7% of capacity the week ended December 20, the highest run rate since the week ended July 12, according to EIA data.

Analysts polled by Platts expect the run rate to have remained at 92.7% of capacity the week ended December 27.

Flynn said U.S. crude oil inventory drawdowns are not expected to continue into early 2014 as a lot of oil remains in the system.

"I would not be surprised to see inventories build again next year,” Flynn said. “We will likely see more supply than demand in the coming weeks."

U.S. GASOLINE STOCKS RISE AS PRODUCTION SOARS

U.S. gasoline stocks are estimated to have risen 2 million barrels the week ended December 27 as demand for the fuel likely peaked at the Christmas holiday, Flynn said, amid a high production level.

For the week ended December 20, U.S. gasoline production hit a record high of 9.715 million b/d, up 404,000 b/d from the week ended December 13.

Adjusted net output of finished motor gasoline from refiners and blenders has increased in four out of the previous five weeks and topped the previous high of 9.596 million b/d reached in the week ended July 5.

U.S. Gulf Coast refiners and blenders boosted production by 166,000 b/d to 2.25 million b/d for the December 20 reporting week. In the U.S. Midwest, production hit a record at 2.707 million b/d, topping the 2.573 million b/d reached in the reporting week ended December 6.

BP brought online a 102,000 b/d coker at its Whiting, Indiana, refinery in November, and the unit is expected to reach full capacity in early 2014. The coker was designed to allow BP to make more use of heavy Canadian crude oil to produce more valuable lighter products.

U.S. distillate stocks are estimated to have risen by 600,000 barrels the week ended December 27, according to analysts.

Flynn said increased production could be offset by strong diesel demand.
Source: Platts