US distillate stocks touch five-week low as winter weather supports demand

US distillate inventories moved lower for a third straight week in the seven days ended Jan. 28, US Energy Information Administration data showed Feb. 2, as winter weather supported demand.

Nationwide distillate inventories fell 2.41 million barrels to 122.74 million barrels, EIA said, putting them nearly 19% behind the five-year average for this time of year.

USAC temperatures have been in and out of the midteens for the past few weeks, raising natural gas prices and pushing electric utilities to increase their oil consumption. The low temperatures have seen as much as 25%-30% of USAC power generation being produced by oil, according to market sources.

USAC combined low and ultra-low sulfur diesel stocks are now 28% below the five-year average after falling 1.29 million barrels over the week to 33.56 million barrels. Regional inventories were last lower in May 2021.

Meanwhile, diesel inventories in the US Gulf Coast, which typically supplies the eastern states via the Colonial Pipeline, fell 2.12 million barrels over the period to 34.87 million barrels, a counter-seasonal draw that left stocks more than 20% below average for this time of the year.

The combination of tight availabilities and strong demand pushed the New York Harbor heating oil crack versus Brent to more than $23/b last week, levels last seen in November 2008.

Total gasoline inventories climbed for a fifth straight week, building 2.12 million barrels to 250.04 million barrels. Gasoline stocks are now at the highest since late February 2021, but remain around 1.5% below the five-year average.

Total product supplied for gasoline, EIA's proxy for demand, averaged 8.23 million b/d, down 280,000 b/d and nearly 5% below normal.

A 1.38-million-barrel uptick in USAC inventories comprised the bulk of the build. Gasoline demand likely took a hit from a major winter storm that impacted the region late in the week. While the bulk of the storm's impact, which brought nearly two feet of snow to the Boston area over the weekend, was seen outside the reporting period, forecasts calling for widespread travel disruptions likely weighed on rack demand and impacted the broader EIA data.

Nationwide US crude inventories declined 1.05 million barrels over the period to 415.14 million barrels, snapping two weeks of builds and pushing stocks 8.6% behind the five-year average.

The draw comes as total production fell for a second week to 11.5 million b/d, a 10-week low.

Notably, inventories at the NYEMX delivery point of Cushing, Oklahoma, extended their decline for a fourth straight week, falling 1.17 million barrels to a nine-week-low 30.53 million barrels.

The crude draw was offset in part by both lower exports and a slide in refinery demand.

Outbound crude volumes averaged 2.38 million b/d, down 420,000 b/d from the week prior. The decline pushed the four-week moving average of exports to 2.43 million b/d, the lowest since the week ended Feb. 8, 2019.

Total refinery net crude inputs averaged 15.25 million b/d, down 250,000 b/d on the week and the lowest since late October. Refinery utilization, meanwhile, was down 1 percentage point at 86.7% of capacity.