Home Commodities US crude stocks show surprise draw amid strong refinery demand, exports

US crude stocks show surprise draw amid strong refinery demand, exports



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.

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