US crude oil inventories fall to 18-month low amid import slowdown: EIA

US crude oil inventory draws resumed in the week ended July 23 amid much lower imports and steady exports, Energy Information Administration data showed July 28.

Total US commercial crude oil stockpiles contracted 4.09 million barrels to 435.6 million barrels in the week to July 23, EIA said, pushing inventories 7.1% behind the five-year average.

The crude draw more than erased a 2.11 million-barrel build seen during the week prior and left stocks at the lowest since the week ended Jan. 31, 2020.

NYMEX September WTI settled up 74 cents at $72.39/b and ICE September Brent climbed 26 cents to $74.74/b.

The crude draw was concentrated on the US West Coast, where stocks fell 3.84 million barrels to 45.23 million barrels, an eight-month low. Inventories at the NYMEX delivery point of Cushing, Oklahoma, declined 1.27 million barrels to 35.44 million barrels and were last lower during the week ended Jan. 17, 2020.

Crude prices moved higher following the EIA release, but the overall market reaction appeared muted due to recently bullish expectations of an inventory draw.

American Petroleum Institute data released after market settle July 27 showed US crude oil stocks fell 4.73 million barrels during the week ended July 23, while analysts surveyed by S&P Global Platts on July 26 had called for a 2.5 million-barrel draw over the same period.

The crude draw comes as imports slowed to 6.51 million b/d, a 590,000 b/d, of 8.3%, slide from the week prior, when inbound crude volumes averaged 7.1 million b/d, the strongest since May 2020. Exports, in contrast, climbed around 30,000 b/d and remained near two-month lows at 2.49 million b/d.

Total US crude production was down 200,000 b/d at 11.2 million b/d, a four-week low, but this decline was largely offset by a 130,000 b/d slide in total refinery net crude inputs, which were the weakest since May at 15.88 million b/d.

The slide in refinery demand was most acute in the Midwest. Refinery net inputs there were down nearly 5% on the week at 3.84 million b/d and were last lower in early June.

The Midwest refinery slowdown comes amid reports that BP shut down a coker at its 435,000 b/d Whiting, Indiana, plant last week for unplanned work. The unit is expected to be down for two to three weeks for repair, according to several sources familiar with the situation.

The outage supported higher distillate product prices, pushing the Chicago jet-to-NYMEX ULSD differential to minus 13.33 cents/gal for the week ended July 23, up from minus 14.25 cents/gal the week earlier and the strongest level since the week of May 23, according to S&P Global Platts assessments.

And the Chicago ULSD-to-NYMEX ULSD differential flipped into positive territory for the first time since the end of May. The differential for the week ended July 23 averaged 75 points/gal, up from minus 1.65 cents/gal the week earlier.

Total US distillate stocks fell 3.09 million barrels to 137.91 million barrels last week, EIA said, a four-week low and nearly 23% behind the five-year average.

NYMEX August ULSD settled up 1.21 cents at $2.1560/gal.

Gasoline stocks fall, but demand languishes

Gasoline inventories declined 2.25 million barrels to 234.16 million barrels, an eight-week low, led by a 3.18 million-barrel slide in US Atlantic Coast stocks to 64.7 million barrels.

NYMEX August RBOB settled down 59 points at $2.3082/gal.

Like crude, the gasoline draw appears mostly predicated on a significant slowdown in imports, which fell 470,000 b/d to 910,000 b/d. Gasoline imports had been at a more than 10-year high 1.37 million b/d during the week higher.

Despite an overall slide in refinery utilization, which fell 0.3 percentage point to 91.1% of capacity, gasoline production climbed to 9.78 million b/d, an increase of 7% from the week prior. Meanwhile implied, demand edged just 30,000 b/d higher to 9.33 million b/d, falling 2.6% behind the five-year average.