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US crude oil inventory draws resume as refinery recovery extends

US crude oil inventory draws likely resumed during the week ended Jan. 22 as refinery runs continued to normalize, an S&P Global Platts analysis showed Jan. 25.

US commercial inventories are expected to have declined 1.7 million barrels to around 484.9 million barrels last week, according to analysts surveyed by Platts. The counter-seasonal draw down would leave stockpiles around 8% above the five-year average of US Energy Information Administration data, in from 9.3% the week prior and marking the narrowest supply overhang since late November.

The drawdown comes amid a continued normalization of refinery runs. Total refinery utilization is expected to decline to 81.8% of capacity, down 0.7 percentage point on the week, analysts said. The slowdown is well under the 2.9 percentage point-decline EIA shows typically occurs during the period and would leave run rates just 7.3% behind the five-year average, the smallest deficit since the week ended March 20.

While refinery runs have steadily trended toward normal in 2021, they remain very weak. Approximately 4.737 million b/d of crude distillation capacity was offline in the week ended Jan. 22, S&P Global Platts Analytics data shows, up from 4.486 million b/d the week prior and nearly 50% more than year-ago levels of 3.215 million b/d.

US gasoline inventories are expected to have climbed 1.2 million barrels to 246.4 million barrels, analysts said. Despite the predicted build, gasoline stocks are expected to fall 2.4% behind the five-year average, out form 2.3% the week prior, extending a general tightening trend for the seventh week.

During the week ended Jan. 15, EIA-reported implied gasoline demand climbed 580,000 b/d to 8.11 million b/d. It was the largest one-week increase since the week ended June 19 and put demand just 6.4% behind the five-year average.

Gasoline consumption typically edges higher throughout the winter toward an early March peak, and while state and local pandemic restrictions have blunted these seasonal trends, there are signs of a broad recovery in gasoline demand. Apple Mobility data shows US driving activity was higher for a third straight week last week, climbing nearly 2% from the week prior and up nearly 3% from a late-December nadir.

This trend is likely to be encouraged by the easing of lockdown measures in coming weeks in several states. California on Jan. 25 lifted a regional stay-at-home order that affected the vast majority of residents. New York Governor Andrew Cuomo said Jan. 25 that the state is planning to ease some restrictions amid a slowdown in new cases.

Total US distillate stockpiles likely declined 800,000 barrels to 162.9 million barrels, analysts said, leaving them around 8% above the five-year average, the widest surplus since the week ended Dec. 18.
Source: Platts

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