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Crude, refined product draws expected amid plunging energy futures

More bullish draws of commercial crude oil and fuel products are expected from US inventories for the week ended July 16 even though energy futures continued to plunge July 19 amid rising global production volumes, growing pandemic fears and a broad stock market selloff.

The weekly streak of US crude oil inventory draws likely extended to nine for the week ended July 16 amid the busier summer driving season and a small expected uptick in refinery demand, analysts surveyed by S&P Global Platts said July 19.

Total US commercial crude oil stocks likely declined by 6.7 million barrels to 430.9 million barrels, analysts said. The draw would leave stocks more than 8% below the five-year average of US Energy Information Administration data and the lowest since the week ended Jan. 17, 2020.

The nine-week streak of declines would leave stocks down by more than 55 million barrels from mid-May.

The draw comes as refinery utilization is expected to average roughly 92.1% of capacity, up more than 0.3 percentage point from the week prior following two weeks of unexpected declines in July. Refinery utilization is back to pre-pandemic levels and just above the five-year average.

But while utilization rates have been above normal since late May, refinery crude demand has continued to lag historic norms. Total net crude inputs are forecast by S&P Global Platts Analytics to average 15.93 million b/d in the week ended July 16, down around 170,000 b/d from the week prior and still nearly 2% behind the five-year average of EIA data.

US domestic crude production rose to a 14-month high of 11.4 million b/d for the week ended July 9, helping pull crude futures below $70/b on July 19.

Platts Analytics expects crude imports to fall to 5.9 million b/d, while exports should dip back down to 3.5 million b/d.

Following the July 4 summer travel spike, US gasoline demand plunged and is expected to soften slightly again from 9.265 million b/d down to 9.26 million b/d for the week ended July 16, according to Platts Analytics. Gasoline output is expected to dip to 8.09 million b/d with refiners’ gasoline yield up at about 50.8%.

Gasoline swings back to draw
Despite an unexpected uptick in gasoline stocks the week prior, relatively strong US driving demand likely offset the higher refinery runs and contributed to gasoline inventory draws last week.

Analysts surveyed by Platts saw gasoline stocks dip by 1.1 million barrels lower in the week ended July 16, putting inventories at about 235.4 million barrels. The expected draw would put inventories about 1% below the five-year average.

Platts Analytics expects gasoline imports will increase slightly to about 1.05 million b/d, while exports likely dipped to 800,000 b/d.

Total distillate stocks likely sunk in the week ended July 16 by more than 600,000 barrels to about 141.7 million barrels, analysts said. With the draw, inventories would fall almost 5% behind the five-year average.

Distillate imports are expected to decline to 100,000 b/d, while exports should rise to 1.3 million b/d, Platts Analytics projects.
Source: Platts

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