Commentary on U.S. EIA Oil Stocks Data -- by Platts Oil Futures Editor Geoffrey Craig


U.S. crude stocks declined 6.8 million barrels last week: EIA


New York - June 10, 2015


  • Imports drop 750,000 barrels per day (b/d) despite favorable benchmark spreads
  • Midwest stocks fall 3 mil barrels as Canadian imports decrease
  • Gasoline stocks down 2.9 mil barrels on soaring demand


NEW YORK, June 10, 2015 - Platts U.S. commercial crude stocks fell 6.812 million barrels to 470.603 million barrels for week that ended June 5, according to Energy Information Administration (EIA) data released Wednesday.


The withdrawal far exceeded analysts' expectations, but was consistent with American Petroleum Institute (API) data released Tuesday evening.


Analysts surveyed Monday by Platts had been expecting crude stocks to fall 1.6 million barrels. API data showed a 6.7 million-barrel reduction in U.S. crude stocks for the week ended June 5.


A combination of fewer imports and higher crude runs pushed stocks lower, despite an uptick in production.


Imports dropped 750,000 barrels per day (b/d) to 6.623 million b/d, lowering the four-week moving average to 6.973 million b/d, compared with a year-ago level of 7.137 million b/d.

By country of origin, imports from Colombia fell 300,000 b/d to 295,000 b/d. Imports from Kuwait fell 398,000 b/d to 43,000 b/d.

There were fewer imports even though price signals indicated sourcing barrels from overseas may be attractive.

The prompt ICE Brent-West Texas Intermediate (WTI) spread narrowed to less than $4 per barrel (/b) last week, having been more than $8/b in late April.

The relative strength of U.S. crudes can also be seen in Light Louisiana Sweet, which averaged a 14 cent/b premium last week to ICE Brent, compared with a 65-cent discount in May. Yet Gulf Coast crude imports dipped 72,000 b/d last week to 3.234 million b/d.

Expensive freight could be one factor dissuading waterborne imports, but at least in the case of West African imports, the economics of running West Africa (WAF) crudes already appears favorable.

Gulf Coast cracking margins for processing Nigeria's Bonny Light closed at $10.27/b June 5, compared with $8.65/b on a 30-day moving average. By comparison, WTI cracking margins closed at $9.20/b, down from a 30-day moving average of $10.27/b.

Platts margin data reflects the difference between a crude's netback and its spot price. Netbacks are based on crude yields, which are calculated by applying Platts product price assessments to yield formulas designed by Turner, Mason & Co.

Nigerian imports failed to materialize for the third week in a row, marking the longest period since November that Nigerian crude has not flowed to the U.S.

Next week's data could snap that streak because the Philadelphia Energy Solutions (PES) refinery in Philadelphia was heard by a U.S source on Tuesday to have bought a Nigerian cargo.

Cracking margins on the U.S Atlantic Coast using Bonny Light spiked to $13.33/b last Friday, well-above the 30-day moving average Tuesday of around $10.50/b.


CANADIAN IMPORTS DOWN

WAF imports have fallen steadily since at least 2011, as soaring U.S. production has displaced barrels from Nigeria and Angola.

U.S. crude production increased 24,000 b/d last week to 9.610 million b/d. Lower 48 state production was up 22,000 b/d to 9.101 million b/d, with Alaskan production accounting for the remainder.

Imports from Canada fell 280,000 b/d to 2.588 million b/d. One factor behind the drop in Canadian imports could be lower production.

Wildfires in Alberta, maintenance and upgrades have reduced Canadian supply in May and June by between 350,000 b/d and 400,000 b/d, according to consultancy Energy Aspects.

Most Canadian crude enters the US through the Midwest, which saw imports drop 247,000 b/d to 1.798 million b/d. The region's crude stocks saw the biggest draw last week, falling 3.008 million barrels to 138.515 million barrels.

Within the Midwest, stocks at Cushing, Oklahoma -- delivery point for the NYMEX futures contract -- fell 1.024 million barrels last week to 58.003 million barrels.

Stocks decreased across all regions except the Atlantic Coast where inventories ticked 214,000 barrels higher. Gulf Coast stocks fell 1.88 million barrels to 236.47 million barrels, as crude runs increased 67,000 b/d to 8.859 million b/d.

Gross inputs rose 135,000 b/d to 9.046 million b/d, an all-time high. The region's refinery utilization pushed 1.5 percentage points higher to 98.4% of operable capacity, the highest mark since at least 2010.

Total crude runs increased 169,000 b/d to 16.576 million b/d. The four-week moving average rose to 16.412 million b/d, compared with 15.851 million b/d one year ago.

The refinery utilization rate increased 1.4 percentage points to 94.6% of operable capacity, versus only 87.9% one year ago.


GASOLINE DEMAND SOARS

U.S. gasoline stocks fell 2.939 million barrels to 217.354 million barrels last week. Analysts had been looking for a 500,000-barrel draw.

Blending component stocks were down 3.076 million barrels to 191.437 million barrels, while stocks of conventional gasoline rose 134,000 barrels to 25.882 million barrels.

Current stocks are in line with the EIA five-year average. For the same reporting period, by region, stocks on the Atlantic Coast, Midwest, Gulf Coast and West Coast range from a discount of almost 1% to a surplus of 2.8%.

Implied* gasoline demand shot up 622,000 b/d to 9.6 million b/d. The four-week moving average was 9.393 million b/d last week, strongest since August 2010, when demand was regularly above 9.4 million b/d.

U.S. distillate stocks rose 865,000 barrels to 133.477 million barrels last week. Analysts had been expecting a 1.2 million-barrel build.

The region with the largest build was the Atlantic Coast, where stocks of low and ultra-low sulfur diesel (ULSD) grew 985,000 barrels to 34.853 million barrels.

For more information on crude oil, visit the Platts website.


* Implied demand is the amount of product that moves through the US distribution system, not actual end consumption.


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