U.S. crude oil stocks likely fell 2 million barrels the week ended June 20 on expectations that refinery utilization rates rose, 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."I expect a normal drop in supply as refiners continue to refine," said Phil Flynn, senior analyst at Price Futures Group, who estimates a 2 million-barrel draw in crude oil stocks.

Overall, analysts anticipate that refinery utilization rates rose 1 percentage point to 89.1% of capacity the week ended June 20, based on EIA data. Estimates were wide-ranging from a 1 percentage-point drop to a 2 percentage-point rise.

Carl Larry, who estimates a 1 percentage-point drop in rates, said refining issues were keeping rates down.

Motiva's 600,000 barrels per day (b/d) refinery in Port Arthur, Texas, reduced rates June 12, trade sources said, after unplanned work was reported at the refinery due to recent operational incidents.

However, normal rates were reported to have returned to Motiva's VPS-5 crude oil unit on June 18, according to Tim Evans, commodity analyst at Citi Futures Perspective.

Still, some analysts contend that crude oil stocks rose the week ended June 20 amid a back-up of supplies from pipeline issues, including TransCanada's 590,000 b/d Keystone crude oil pipeline, which reduced rates June 16 after tornadoes in Nebraska cut power to a pump station on the line.

"As you know, flows can vary from day to day, so we can't put an exact number on what it will be," TransCanada spokesman Shawn Howard said in an email about the pumping rate.

It was not clear how much rates were cut on the line, which carries crude oil from the town of Hardisty in Alberta, Canada, southeast into Patoka, Illinois.

Also last week, the Seaway pipeline that runs from Cushing, Oklahoma, to Freeport, Texas, resumed operations June 20 after a four-day maintenance.

According to a notice on its site Friday, the pipeline continues to perform as expected with no restrictions on volumes from Cushing.

GASOLINE, DISTILLATE STOCKS UP

U.S. gasoline stocks are expected to have risen 2 million barrels the week ended June 20, while distillate stocks likely rose 1 million barrels.

Evans noted that gasoline inventories have risen the past three reporting weeks and the four-week average gasoline production of 9.424 million b/d as of June 13 was 261,000 b/d, or 2.8% higher than a year ago.

"So we're not sure how much additional supply is needed, but we do see room for production to increase a bit further in the weeks ahead," Evans said.

At Cushing, Oklahoma, some analysts expect stocks there to resume their downward trajectory by having fallen by about 1 million barrels the week ended June 20.

For the June 13 reporting week, Cushing stocks rose 200,000 barrels, marking the first build at the hub in 10 weeks. Still, stocks at Cushing were 46.7% below the five-year average for that reporting week.

In the futures market, Evans said there was still support in New York Mercantile Exchange (NYMEX) crude oil from a steady downtrend in stocks at Cushing and with yet more southbound pipeline capacity about to come online.

Seaway is expected to complete an additional loop of the pipeline linking Cushing to Freeport, Texas, that would more than double capacity to 850,000 b/d by the end of the month.

"However, we think it’s important to note that this downtrend really only represents a transfer of oil to another location. If it counts as increased demand at Cushing, then it also means an increase in supply on the Gulf Coast," Evans said.

Crude oil stocks on the U.S. Gulf Coast were at 205.78 million barrels for the June 13 reporting week, putting inventories at nearly 11% above the EIA five-year average. That's down from more than 14% five weeks earlier.
Source: Platts