Analysis: US crude stocks drop amid strong runs, exports
Still-strong US Gulf Coast refinery runs and a sharp rebound in crude exports helped account for a 5.3 million barrel-decline in US commercial crude stocks, US Energy Information Administration data showed Wednesday.
Refined product stock builds were not enough to slow a rallying oil complex, but they do suggest US regions facing the incoming Hurricane Florence are amply supplied.
Prompt NYMEX October crude settled $1.12 higher at $70.37/b. ICE November Brent closed 68 cents higher at $79.74/b.
Crude inventories dropped 5.3 million barrels to 396.19 million barrels for the reporting week ended September 7. The draw was more than double the 2.7 million barrels analysts surveyed Monday had been expecting.
EIA data showed US refinery utilization rates rose 1 percentage point to 97.6% of capacity, counter to analysts expectations of a 0.9 percentage point decline. Total crude runs jumped 210,000 b/d to 17.86 million b/d.
Runs remained particularly strong on the USGC — home to more than half of all US refinery operable capacity — up 166,000 b/d to 9.51 million b/d.
This helped pull USGC crude stocks 1.7 million barrels lower to 208.64 million barrels.
Stocks in Cushing, Oklahoma — delivery point for the NYMEX WTI contract — resumed their decline, down 1.24 million barrels to 23.58 million barrels. Despite this, prompt NYMEX backwardation averaged 22 cents/b last week, in from around 36-37 cent/b over the prior two weeks.
US crude exports rose sharply, up 320,000 b/d to 1.83 million b/d, facilitated by a Brent/WTI spread trading around $9/b so far in September. S&P Global Platts Analytics late last week pegged exports at 1.667 million b/d, according to cFlow data.
S&P Global Platts calculations show a workable arbitrage for US crude into the Mediterranean. WTI has averaged a $1.30-$2/b discount on a delivered-basis to Azeri Light and Nigerian Bonny Light into Lavera so far in September.
PRODUCT STOCKS ADEQUATE AHEAD OF FLORENCE
Strong refinery activity across the US has kept refined product stocks ample.
EIA data showed US distillate stocks jumped 6.16 million barrels to 139.28 million barrels last week, nearly triple analysts’ expectations. While analysts had been looking for gasoline stocks to remain flat, EIA data showed stocks rose 1.25 million barrels to 235.87 million barrels.
Stocks in regions likely to bear the brunt of Hurricane Florence remain comfortable.
US Atlantic Coast stocks — fed in large part by Colonial Pipeline and home to the New York Harbor-delivered NYMEX RBOB contract and — rose 666,000 barrels to 66.75 million barrels, putting them almost 14% above the five-year EIA average.
Prompt NYMEX October RBOB was up 2.33 cents at $2.0375/gal.
EIA data showed stocks in the Lower Atlantic — directly in the path of Florence — at 27.91 million barrels, almost 10% above the five-year average and almost 23% above year-ago levels.
Lower Atlantic distillate stocks at 12.49 million barrels are just over 8.5% above the EIA five-year average.
NYMEX October ULSD was up 1.04 cents at $2.2624/gal.