Analysis of US EIA data: US crude stocks tumbled 6.5 million barrels last week; imports drop

distributed by noodls on 08/01/2012 16:43

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New York - August 1, 2012

U.S. crude oil stocks plunged 6.522 million barrels last week, led by a nearly 4-million-barrel decline on the U.S. Gulf Coast as imports pulled back, U.S. Energy Information Administration (EIA) data released Wednesday shows.

At 373.586 million barrels, U.S. crude stocks for the week ending July 27 were about 9.7% greater than the five-year average and more than 18 million barrels greater than stocks levels during the same time-frame in 2011.

Crude oil stocks were expected to resume their typical decline for this time of the year, according to analysts, after a counter-seasonal increase in stocks by some 2.7 million barrels during the week ending July 20.

Analysts polled by Platts had estimated a 1.6-million-barrel draw in crude stocks for the week ending July 27.

Late Tuesday, the American Petroleum Institute (API) reported a whopping 11.605-million-barrel draw in crude stocks last week, as companies ramped up deliveries of crude from stockpiles. Maria Coronado, senior economic analyst at API, said Tuesday that the overall crude draw was based mostly on business decisions by U.S. companies who are surveyed by the association.

"We had over 1,000 of our respondents show a very big draw last week in stocks," Coronado said, with the majority in the Gulf Coast. "There were a lot of deliverables during that week and although [refinery] runs were lower this week, they are still averaging higher than normal."

The Gulf Coast also led the decline in the EIA stocks data with a 3.9-million-barrel draw in last week. During that time, imports to the region fell 659,000 barrels per day (b/d), more than offsetting a drop in Gulf Coast refinery runs by 3.3 percentage points to 90.4% of capacity.

In the Midwest, crude stocks dropped 3 million barrels, including a 1.4 million-barrel decline at Cushing, Oklahoma - delivery point for the New York Mercantile Exchange's (NYMEX) crude oil futures contracts. Cushing stocks at 45.100 million barrels were some 53% greater than the five-year average.

Despite an upset at BP's 405,000 b/d Whiting, Indiana, refinery, which shut its coker after a small fire late July 23, runs in the Midwest were at 98.9% of capacity, the highest since the EIA began reporting those figures in June 2010.

Overall, U.S. refinery runs declined 0.8 percentage point to 92.2% of capacity, but remain near a high of 93% of capacity reached the prior week - the highest run rate since July 2007.

Imports to the U.S. were down 1.227 million b/d to 8.406 million b/d, as some major importers lowered shipments to the West.

Imports of Kuwaiti crude fell 349,000 b/d to 214,000 b/d last week, the EIA data showed, although that was off of any unusually high 563,000 b/d.

Imports from Saudi Arabia fell 221,000 b/d to 1.387 million b/d, while imports from Canada dropped 202,000 b/d to 2.271 million b/d.

Nigerian imports jumped 380,000 b/d to 440,000 b/d, compensating for a 321,000 b/d drop in Angolan imports to 169,000 b/d.

GASOLINE STOCKS SUPPLY DEFICIT NARROWS

U.S. gasoline stocks fell 2.174 million barrels to 207.87 million barrels last week, tightening the supply deficit to the five-year average, as both imports and production fell, the EIA data showed.

U.S. gasoline stocks were 2.8% less than the five-year average last week. The stock draw was concentrated on the U.S. Atlantic Coast, which was particularly bullish for the New York-delivered NYMEX RBOB contract. Atlantic Coast stocks fell 1.289 million barrels to 52.811 million barrels, causing the deficit to the five-year average to widen to 8.39% from 6.58%.

U.S. West Coast stocks were also tight. Inventories fell 295,000 barrels last week to 26.6 million barrels, leaving stocks at 8.42% below the five-year average.

The U.S. gasoline stock draw was caused primarily by a 382,000-b/d decline in imports to 638,000 b/d. On the Atlantic Coast, which is increasingly dependent on imported gasoline following recent refinery closures, imports fell 387,000 b/d to 577,000 b/d.

Net production and blending of finished gasoline fell 102,000 b/d on the Atlantic Coast and 122,000 b/d on the Gulf Coast, likely the result of lower refinery runs.

Atlantic Coast refiners reduced crude inputs by 25,000 b/d, while inputs on the Gulf Coast tumbled 323,000 b/d.

The decline comes among a slew of refinery news last week including issues at BP's Whiting, Indiana, refinery, Sunoco's Philadelphia complex and Valero's plant in Meraux, Louisiana, which all experienced upsets last week.

U.S. implied gasoline demand* edged higher last week by 160,000 b/d to 8.82 million b/d. Still, the four-week average at 8.756 million b/d was less than for the fourth week in a row, and 2.38% below the same period in 2011.

U.S. distillate stocks fell 974,000 barrels to 124.27 million barrels, as production edged lower while demand climbed.

Implied demand jumped 264,000 b/d to 3.746 million b/d, the EIA data showed, while production slipped 19,000 b/d to 4.628 million b/d.

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

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