US crude oil inventory draws likely extend for second week amid export surge

New York — US crude oil inventory draws likely extended in the week ended Jan. 29 amid an uptick in export activity, an S&P Global Platts analysis showed Feb. 1.

Total commercial crude stocks are expected to have declined 2.4 million barrels to around 474.3 million barrels, according to analyst surveyed by Platts. The draw would leave inventories 4.5% above the five-year average of US Energy Information Administration data, in from 6% the week prior and marking the lowest overhang since the week ended April 3.

The anticipated crude draw comes as US exports averaged at 4.02 million b/d in the seven days ended Jan. 29, according to data from cFlow, Platts trade-flow software. EIA-reported exports averaged 3.4 million b/d during the week prior and last crossed the 4 million b/d threshold during the week ended March 13.

US exports to Asia climbed to a four-week-high 2.05 million b/d, up from 1.18 million b/d the week prior, cFlow data showed. While Transatlantic exports fell to 350,000 b/d, down 65% from the week prior and the lowest in at least five weeks.

To date in January, the arbitrage incentive for moving WTI MEH to Singapore versus Tapis crude has averaged at around 36 cents/b, according to S&P Global Platts Analytics data, presenting the strongest incentive for moving US crude to Southeast Asia since April.

US refinery utilization is expected to climb 0.2 percentage point to around 81.9% of capacity, analysts said. The expected increase would lag historic norms and push run rates more than 8% behind the five-year average from 7.4% the week prior, snapping a five-week normalizing trend.

Gasoline stocks expected higher

Total gasoline inventories are expected to have climbed 1.5 million barrels last week to 249.2 million barrels, analysts said. Stocks would continue to lose ground to the five-year average despite the expected build, falling 2.4% below average.

The tightening supply situation has pushed RBOB futures to their highest since February and sent cracks to six-month highs, even as US gasoline demand remains firmly more than 10% below normal. The Platts US Gulf Coast unleaded 87 crack versus WTI averaged around $12/b last week and is approaching levels last seen in early March, ahead of the first round of pandemic lockdowns in the US.

Several states, including New York and California, have begun to ease their latest round of pandemic lockdowns amid a slowdown in new cases, potentially offering a tailwind to gasoline demand recovery in the run up to spring. However, Apple mobility data shows US driving activity turned lower last week, sliding around 2 percentage points to a three-week low. The pullback ended a four-week uptrend and put driving activity around 4 percentage points behind year-ago levels.

Distillate inventory draws are expected to extend for a second week, with stocks falling 1.3 million barrels to 161.5 million barrels, analysts said. The counter-seasonal drawdown would narrow the surplus to the five-year average to 7%, the lowest since the week ended Jan. 6.