US commercial crude stocks fall 2.49 million barrels
Cushing stocks down 2.1 million barrels
Refinery demand holds 5% above normal
US crude oil inventories declined counter-seasonally during the week ended Jan. 12, amid continued above-trend refinery demand and surging exports, US Energy Information Administration data showed Jan. 18.
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US commercial crude stocks fell 2.49 million barrels to 429.91 million barrels in the week ended Jan. 12, EIA data showed. Commercial inventories now stand 3.2% below the five-year average for this time of year, the widest deficit since late October.
The draw was led by a 2.1-million-barrel decline in inventories at the NYMEX delivery hub of Cushing, Oklahoma, putting stocks there at a five-week-low 32.07 million barrels.
The NYMEX WTI forward curve has entered backwardation for longer-dated time spreads in recent days, disincentivizing storage, though prompt time-spreads remain in contango. The front-month contract averaged a 4.2 cent/b discount to the sixth-month contract in the five-days ended Jan. 12. but a 9 cent/b premium to the second-month contract, an S&P Global Commodity Insights analysis showed.
Notably 600,000 barrels entered the US Strategic Petroleum Reserve, marking a fifth-straight weekly build and putting stocks there to an eight-month high of 355.59 million barrels.
The topline draw ran counter to recent market expectations and sent crude futures higher on the day. The front-month NYMEX February WTI contract settled up $1.52 at $74.08/b and prompt March ICE Brent climbed $1.22 to $79.10/b.
Continued above-trend refinery demand added pressure to inventories. Total refinery net crude inputs and utilization were around 5% above their respectively five-year average at 16.65 million b/d and 92.6% of capacity, EIA data showed.
Refinery runs have been supported by strengthened margins. The US Gulf Coast WTI MEH cracking margin has averaged $14.24/b to-date in January, S&P Global data shows, up from a December average of $10.84/b.
Inventories were further pressured by an uptick in weekly exports, which surged 51% to 5.03 million b/d. The weekly export figure has seen large swings since mid-December but the four-week moving average is relatively steady in 4 million to 4.4 million b/d, notably down around 8% from their most recent peak at around 4.8 million b/d in mid-November.
US gasoline stocks climbed 3.08 million barrels to 248.07 million barrels. The seasonal build held nationwide inventories at parity with the five-year average, though in some regions supply is much tighter. US Atlantic Coast stocks dipped 850,000 barrels to 60.02 million barrels and were around 7% below normal for this time of year, while US West Coast stocks were also 7% below average despite building 830,000 barrels to 30/32 million barrels during the week.
Distillate stocks continued to normalize amid persistent below trend demand. Inventories climbed 2.37 million barrels to 134.75 million barrels. The build put stocks just 3.2% behind the five-year average, marking the narrowest deficit since November 2021.
Total product supplied for distillates, the EIA’s proxy for demand, fell 15% behind normal despite climbing to a three-week high 3.65 million b/d. The four-week moving average of implied distillate demand was around 5% behind the five-year average in the week to Jan. 12, marking a ninth-straight week of seasonally weak demand.