ANALYSIS: US gasoline, distillate stocks plunge as winter storm drives USGC runs to all-time lows

New York — US refined product inventories moved sharply lower in the week ended Feb. 26 as US Gulf Coast refinery runs remained stunted in the wake of severe winter weather earlier in the month, US Energy Information Administration showed March 3.

US gasoline inventories plunged 13.62 million barrels to 243.47 million barrels last week, EIA data showed. It was the largest-ever one-week draw reported by EIA in records dating back to January 1992 and put inventories nearly 4% behind the five-year average.

Total distillate stocks moved 9.72 million-barrels lower over the week to 143 million barrels -- the biggest one-week draw since January 2003 -- falling behind the five-year average for the first time since April.

NYMEX front-month RBOB settled 1.54 cents higher at $1.9518/gal and April ULSD climbed 2.76 cents to $1.8357/gal.

The product draws were due in large part to lowered production stemming from lingering refinery outages on the US Gulf Coast.

Refinery net crude inputs averaged 9.9 million b/d last week, down 2.33 million b/d from the week prior and the lowest on record dating back to 1982. Total refinery utilization fell 12.6 percentage points to 56% of capacity, the lowest on record.

Power outages and extreme low temperatures impacted all of Texas' 5.9 million b/d of refinery capacity in mid-February, taking as much as 4.4 million b/d of refinery capacity fully offline Feb. 18.

Operators had begun restarting more than 2.9 million b/d of refining capacity during the week ended Feb. 26, but a return to pre-storm capacity is likely to extend into mid-March, according to state filing data.

The bulk of the product draws were in the Gulf Coast and Midwest, the regions hardest hit by severe weather. USGC gasoline stocks were down 11.03 million barrels to 79.85 million barrels, a 14-week low, while Midwest inventories dipped 2.3 million barrels to 51.34 million barrels, the lowest since late-December. The large draws pulled USGC stocks more than 6% below the five-year average, down from a 6% surplus the week prior and opened the Midwest deficit to the average to nearly 15%.

In contrast, US Atlantic Coast gasoline inventories climbed to nearly 6% above normal last week amid a counter-seasonal 200,000-barrel build. Inventories were padded by a uptick in imports to 485,000 b/d, nearly 22% above the five-year average, drawn by a run up in regional crack spreads. The ICE New York Harbor RBOB crack versus Brent averaged $16.30/b last week, compared with a February average of around $15/b.

Adding pressure to gasoline stocks, implied demand jumped 940,000 b/d to 8.15 million b/d, climbing back to the upper end of its recent range after testing nine-month lows the week prior.

Implied demand for distillate fuel was at a seven-week low 3.79 million b/d but demand for jet fuel hit a seven-week high 1.29 million b/d, likely limiting the amount of jet barrels blended into the distillate pool and contributing to the overall inventory draw.

Crude stocks surge amid production restarts

US commercial crude oil inventories saw their largest-ever one-week build last week, with inventories rising 21.56 million barrels to 484.61 million barrels last week. The build pushed stocks 4% above the five-year average, up from around par the week prior.

NYMEX April WTI settled up $1.53 at $61.28/b.

Nearly 97% of the crude build was realized on the US Gulf Coast, where lingering winter storm disruptions had pushed refinery net crude inputs down 35% from the week prior to a 3.89 million b/d -- the lowest since September 2008.

USGC stocks saw upward pressure from both record-low refinery crude demand as well as the rapid return of the nearly 4 million b/d of production taken offline by the storm the week prior.

Around 1.5 million b/d of crude output was still offline as of Feb. 20, according to S&P Global Platts Analytics estimates, but by Feb. 26 this figure had fallen to below 100,000 b/d.

Total US production climbed 300,000 b/d to 10 million b/d last week, leaving it roughly 9% behind pre-storm levels.

Notably, inventories at the NYMEX delivery point of Cushing, Oklahoma, climbed just 490,000 barrels to 48.31 million barrels.

Further padding USGC inventories, weekly US crude exports rose by just 37,000 b/d to average 2.35 million b/d, while the four-week moving average of US crude exports fell to a two-month low.