U.S. commercial crude oil stocks rose 5.4 million barrels to 387.8 million barrels the week ended January 9, U.S. Energy Administration (EIA) data showed.Analysts surveyed Monday expected crude oil stocks to have declined 400,000 barrels.Imports were up 636,000 barrels per day (b/d) to 7.5 million b/d, while crude oil runs dipped below 16 million b/d for the first time since November, helping stocks accumulate.

Refineries processed 15.893 million b/d of crude oil, down 527,000 b/d, lowering the total refinery utilization rate 2.9 percentage points to 91% of operable capacity.

Stocks at Cushing, Oklahoma -- delivery point for the New York Mercantile Exchange (NYMEX) crude oil futures contract -- built 1.78 million barrels to 33.874 million barrels.

Cushing stocks have risen 10 million barrels during the last six weeks. The fill-up could be driven by traders storing crude oil to take advantage of NYMEX crude oil's contango* term structure.

NYMEX prompt futures are less expensive than longer-dated contracts, allowing cash-and-carry trades to be potentially profitable, as long as the spread covers related costs.

On Tuesday, NYMEX crude oil for August delivery settled at a premium of $4.56 per barrel to the February contract.

That being said, Cushing's role has mostly transformed from a storage hub to transit hub, facilitating the flow of domestic and Canadian production to U.S. Gulf Coast (USGC) refineries via an expanded pipeline network.

Cushing stocks drained in 2014 as a result and remain below levels from one year ago, despite the recent uptick.

Expanded pipeline capacity and the contango term structure also may be pushing USGC crude oil stocks higher. The region's inventory rose 910,000 barrels the week ended January 9 to 195.579 million barrels, which was 37 million barrels above the EIA five-year (2009-2013) average.

Moreover, USGC crude oil stocks have gained 1.3% since the last week of November, while over the same 10-week period in 2009-2013, the region's inventory declined 10.5% on average.

Meanwhile, USGC refineries have been operating at high levels. While the refinery utilization rate dropped sharply the week ended January 9, down 3.7 percentage points, it remained robust.

USGC refineries operated at 92.2% of operable capacity the week ended January 9. The region's utilization rate has been above 90% for the last 10 weeks, during which time the utilization rate exceeded year-ago levels nine times.

GASOLINE STOCKS BUILD

Total U.S. gasoline inventories increased 3.2 million barrels to 240.3 million barrels the week ended January 9, outpacing expectations of a 2.7 million-barrel build.

In line with the EIA five-year average, gasoline stocks built each week from early November through the week ended January 9.

The scale of the 2014-2015 increase has been larger than in years past. From trough to peak, gasoline stocks rose 19%, almost double the average gain in the same period in 2009-2013.

On the U.S. Atlantic Coast -- home to the New York Harbor-delivered NYMEX RBOB futures contract -- gasoline stocks increased 1.8 million barrels to 64.2 million barrels, approximately 11% above the five-year average.

USGC gasoline stocks were down 925,000 to 80.567 million barrels, helping mitigate the overall U.S. build.

DISTILLATE STOCKS UP

Total U.S. distillate stocks rose 2.9 million barrels, compared with expectations of a 1.9 million-barrel build.

At 139.9 million barrels, distillate stocks were 4.2% below the five-year average, but the gap keeps closing between current levels and the historic norm for the same reporting period.

Distillate production fell 72,000 b/d to 5.1 million b/d.

USAC combined stocks of low- and ultra-low-sulfur diesel fuel were up 1.5 million barrels to 32.1 million barrels, U.S. Midwest combined stocks increased 838,000 barrels to 33.740 million barrels, and USGC stocks rose 641,000 barrels to 39.640 million barrels.

* Contango is the industry vernacular for the condition whereby prices for nearby delivery are lower than prices for future-month delivery.
Source: http://www.platts.com/pressreleases/2015/011415b