US crude, refined product stocks expected lower amid strong demand, rising exports: analysts

US crude and refined product inventories likely fell the week ended July 19 for the third consecutive week, analysts surveyed by S&P Global Commodity Insights said July 22, as summer travel season has kicked off for petroleum demand.

Nationwide crude inventories are expected to fall 2.77 million barrels to 437.5 million barrels, analysts said, putting stocks 4.7% behind the five-year average of US Energy Information Administration data for this time of year. Given that inventories continue the downward trend, US crude stocks could hit the lowest level seen since early February when inventories were at 427.43 million barrels.

"Petroleum demand was strong last week as the summer travel season is now in full force," Gary Cunningham, analyst at Tradition Energy told Commodity Insights.

With refinery runs expected to maintain their strength during a period of elevated demand, crude inventories have dropped significantly, over 20 million barrels since recent highs seen in late June. The same week last year, stocks drew by 600,000 barrels and averaged a draw of 3 million barrels for the last five years, according to Commodity Insights analysts.

Total refinery runs are projected to rise to 16.95 million b/d according to analysts, a marginal increase on the week but up around 400,000 b/d from late June. Refinery utilization is expected to decline to 93.3% of capacity the week to July 19, down from 93.7% seen last week.

An uptick in exports could also further weigh on crude stocks, with Commodity Insights anticipating an increase to 4.7 million b/d from 3.96 million b/d seen last week. Total exports averaged 4.44 million b/d in the week to July 20, data from Platts cFlow ship and commodity tracking software from S&P Global Commodity Insights showed July 22, up from the EIA's week-ago figure and the highest level since late May.

Nationwide gasoline stocks likely declined 1.42 million barrels to 231.6 million barrels in the week to July 19, analysts said, putting them at roughly par with their five-year average.

Gasoline demand is expected to increase to 9.2 million b/d from 8.78 million b/d, while output could rise to 8.37 million b/d as refiners set gasoline yields to 49.4%, Commodity Insights analysts project. Demand is expected to increase moving into summer travel season.

Analysts are also expecting a stock draw of 240,000 barrels to 127.8 million barrels in distillate inventories, compared to a 200,000-barrel drop the same week last year and a five-year average decline of 500,000 barrels.