US crude oil inventory draws resume as refinery demand surges: EIA

New York — US crude oil inventories edged lower in the week ended March 26 as refinery demand tested one-year highs, US Energy Information Administration data showed March 31.

Total commercial crude stocks fell 880,000 barrels to 501.84 million barrels last week, EIA data showed, leaving storage levels around 5.4% above the five-year average for this time of year.

The draw, the first in five weeks, comes as refinery demand tested one-year highs.

Total net crude inputs climbed 3.8% to 14.94 million b/d, the highest since the week ended March 20, 2020. Refinery utilization reached 83.9% of total capacity, up 2.3 percentage points from the week prior and exceeding levels before mid-February's deep freeze by almost a full percentage point. The increase left utilization just 4.9% behind the five-year average, the narrowest deficit to the average since mid-March 2020.

The US crude draw was concentrated in the Midwest, where stocks slid 1.42 million barrels, and on the West Coast, which saw a 1.27 million-barrel decline in inventories.

The broader Midwest draw belies a 780,000-barrel uptick at the NYMEX delivery point of Cushing, Oklahoma. The build put inventories at Cushing nearly 9% below the five-year average, marking the widest deficit since the week ended June 26.

Front-month NYMEX May WTI settled $1.39 lower on March 31 at $59.16/b, and ICE May declined 60 cents to $63.54/b.

On the US Gulf Coast crude inventories climbed 860,000 barrels to 294.43 million barrels, the highest since the week ended July 24 and nearly 50 million barrels above year-ago levels.

Notably, USGC refinery demand was still down compared with levels seen ahead of the mid-February polar vortex. Regional net crude inputs averaged 8.02 million b/d, up 7.5% from the week prior but still more than 3% shy of their early-February peak.

Last week's higher runs shaved the region's refinery margins, but they still far surpass those of a year earlier.

USGC cracking margins for WTI MEH averaged $12.67/b for the week ended March 26, compared with $12.82/b the week earlier, Platts Analytics data showed. But year over year, Q1 2021 margins to date are averaging $10.27/b compared with $8.19/b for Q1 2020.

Crude exports rise, gasoline stocks fall

USGC stock builds were pared by a nearly 700,000 b/d uptick in exports to 3.17 million b/d, the highest since the week ended Feb. 12.

Total gasoline inventories declined 1.74 million barrels to 230.54 million barrels as gasoline product supplied, EIA's proxy for demand, rose 3.2% to 8.89 million b/d. Implied demand for gasoline was last higher in the week ended Oct. 2 and climbed above the five-year average last week for the first time since the week ended March 13, 2020.

Distillate stocks, in contrast, showed a counter-seasonal build of 2.54million barrels, leaving them nearly 4% above the five-year average at 144.1 million barrels.

Overall refined product demand jumped 8.6% to 20.31 million b/d.

NYMEX April RBOB settled 3.57 cents lower March 31 at $1.9533/gal, and April ULSD declined 1.79 cents to $1.7713/gal.

The warmer weather combined with increased access to the three US-approved vaccines appears to be releasing pent-up driving demand by those who have been isolating in their home for the past year.

Apple Mobility data shows US driving activity climbed 3.3% last week and was the strongest since the week ended Sept. 18. Driving activity was nearly 138% above year-ago levels, which coincided with the ramp up of the initial wave of pandemic lockdowns in several states.