US crude oil inventories expected lower amid likely uptick in refinery runs

US crude oil inventory draws likely extended in the week ended June 25 against a backdrop of rising refinery demand, an S&P Global Platts analysis showed June 28.

Total commercial crude oil stocks are expected to have declined 4.7 million barrels to around 454.4 million barrels, analysts surveyed by Platts said. The draw would put inventories at the lowest since March 2020 and leave them 6.3% behind the five-year average of US Energy Information Administration data, opening the widest deficit to that average since August 2008.

The draw comes as analysts expected refinery utilization to have pushed to around 92.9% of capacity in the week ended June 25, up 0.7 percentage point from the week prior and the highest since early January 2020.

Refinery margins turned higher last week, with US Gulf Coast WTI MEH cracking margins averaging $11.86/b in the five days ended June 24 up from $10.63/b seen the week prior.

Refinery margins were likely supported by strong refined product demand. US Transportation Security Administration data show nearly 2 million passengers per day crossed checkpoints last week, up 4% from the week prior and more than 250% above year-ago levels.

Apple Mobility data shows US driving activity average 162% of the January 2020 baseline, down around 1 percentage point from the index's record high of 163.5% seen the week prior. Transit ridership climbed around 1 percentage point to 96% of baseline, putting it at the highest since early March 2020.

Total refinery net crude demand is expected to have averaged 16.35 million b/d in the week ended June 25, S&P Global Platts Analytics data shows, from an EIA-reported 16.11 million b/d during the week prior.

Total gasoline inventories are expected to have declined around 700,000 barrels to 239.04 million barrels, analysts said, putting them nearly 1% behind the five-year average. Notably, while overall gasoline stocks have tightened in recent weeks, inventories in high demand regions such as the US Atlantic Coast and Midwest have been trending higher.

Following five consecutive weekly builds, USAC gasoline stocks were 1.4% above average in the week ended June 18, EIA data shows, while during the same period Midwest stocks climbed for a third week to just 6% behind average, the narrowest deficit since early January.

Distillate inventories are expected to have climbed 100,000 barrels to 138 million barrels, analysts said.

In contrast to gasoline inventories, USAC diesel stocks remain very tight despite steadily building since late May.

In the week ended June 18, USAC combined low and ultra-low sulfur diesel stocks were more than 19% behind average. The region could see more inventory pressure amid a sharp slowdown in imports. Ship tracking provider Kpler shows USAC diesel imports average 900,000 b/d in the week ended June 25, down from 1.5 million b/d the week prior and the lowest since the week ended May 14.