US crude oil stocks rise on jump in imports, decline in refinery runs

Analysis of US EIA data:

New York - September 28, 2011

US crude oil inventories climbed 1.915 million barrels to 340.963 million barrels during the week that ended September 23, as imports rose while refiners cut runs, data released by the US Energy Information Administration (EIA) Wednesday showed.

Imports rebounded 1.351 million barrels per day (b/d) to 9.702 million b/d. Imports were higher across the U.S., but the U.S. Gulf Coast (USGC) led the way with a 555,000 b/d jump to 5.097 million b/d. The US Atlantic Coast (USAC) came in second, with imports up 442,000 b/d at 1.337 million b/d.

The USGC rise may have been the result of cargoes delayed by Tropical Storm Lee, which hit the region during the weekend of September 4-5.

USGC crude stocks climbed 2.81 million barrels last week, the EIA data showed, due to extra foreign barrels as well as a 129,000 b/d reduction in refinery net inputs to 7.451 million b/d.

The USGC stock build was partially offset by a 1.224 million barrel crude stock draw in the Midwest, to 94.607 million barrels. Stocks at Cushing, Oklahoma, home of the New York Mercantile Exchange’s (NYMEX) crude oil futures contract delivery point, fell 1.078 million barrels to 30.92 million barrels.

Cushing stocks have fallen 10.694 million barrels since early May. The front/second month NYMEX crude oil price spread initially tightened on the draws, coming in to minus 7 cents per barrel (cents/b) on September 13 from minus 52 cents/b on May 2. But the spread has since widened, and is lingering around the minus 23 cents/b area, possibly because of an existing surplus in the Midwest.

Midwest crude stocks last week were 22.406 million barrels, or 31.03%, greater than the five-year average, despite refiners in the region ramping up runs. Net crude inputs at 3.521 million b/d were up just 8,000 b/d last week, but reflected refinery operations at 95.2% of capacity, the highest percentage-wise in the United States.

In contrast, USGC refiners were operating at 88.2% of capacity, down 0.8 percentage points on the week, while USAC refiners were operating at just 75.4% of capacity, down 3.7 percentage points.

US gasoline stocks rose a lower-than-expected 791,000 barrels to 214.866 million barrels last week after analysts had expected a 1.2 million-barrel rise in stock levels, EIA data showed.

The increase came as refinery and net blender production for finished gasoline rose 201,000 b/d to 9.279 million b/d, and demand gained 106,000 b/d to 8.964 million b/d.

Demand, however, remains 419,000 b/d less than year-ago levels. The four-week average for gasoline demand at 8.907 million b/d was 2.4 million b/d below the same period in 2010.

Stocks of gasoline grew the most along the USAC where inventories were up 2.4 million barrels to 56.3 million barrels. A one-million-barrel increase was also seen in the Midwest where stocks rose to 48.9 million barrels, however USGC and West Coast stocks fell 2.1 million barrels and 600,000 barrels, respectively.

Gasoline imports fell 151,000 b/d to 541,000 b/d, with USAC imports losing 66,000 b/d to 521,000 b/d.

US distillate stocks rose only a marginal 72,000 barrels to 157.678 million barrels, while heating USAC oil stocks fell 596,000 barrels 31.753 million barrels during a time of the year when stocks tend to rise.

Stocks of heating oil on the USAC were 6.6 million barrels, or 17.29%, fewer than the five-year average. At the start of September, USAC heating oil stocks were 10.95% below the five-year average.

U.S ultra-low-sulfur-diesel (USLD) stocks rose 600,000 barrels to 106.6 million barrels with the bulk of the increase seen in the USAC where inventories were up 1.4 million barrels to 26.4 million barrels. Stocks of ULSD in the USGC fell 1.1 million barrels to 41.1 million barrels last week.

Overall demand for distillates was down 57,000 b/d to 3.818 million b/d last week and 81,000 b/d lower than year-ago levels of 3.899 million b/d. On a four-week average, distillate demand at 3.801 million b/d was 1 million b/d below year-ago levels.

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