US crude inventory draws resume as refinery demand, exports climb

US crude oil inventory draws resumed in the week ended Aug. 6 amid an uptick in refinery demand and higher exports, US Energy Information Administration data showed Aug. 11.

Total commercial crude stocks declined 450,000 barrels to 438.78 million barrels, leaving the deficit to the five-yar average steady from the week prior at around 6.1%.

Front-month September WTI settled 96 cents higher Aug. 11 at $69.25/b, and ICE October Brent moved up 81 cents to $71.44/b.

The draw was concentrated in the Midwest and Atlantic Coast regions, which saw respective inventory declines of 1.26 million barrels and 940,000 barrels.

US Gulf Coast stocks climbed 1.13 million barrels to a six-week-high 242.85 million barrels.

Notably, inventories at the NYMEX light crude contract delivery point of Cushing, Oklahoma, fell for an eight-straight week, declining 330,000 barrels to 34.58 million barrels. Cushing stocks were last lower during the week ended Nov. 2, 2018.

Cushing stocks have declined more than 11 million barrels since the week ended June 4 and are expected to tighten further as refinery demand continues to outpace production, according to S&P Global Platts Analytics. However, the recent slowdown in exports is expected to slow the pace of these draws, and current Platts Analytics estimates see Cushing stocks falling to 32 million barrels, or roughly 40% of operational capacity, by the end of September.

Weekly US exports averaged 2.66 million b/d, a four-week high and up nearly 40% from the week prior. However, the four-week moving average of exports moved down nearly 13% to 2.38 million b/d, the lowest since the week ended Feb. 8, 2019.

Total US refinery net crude inputs climbed 2% on the week to 16.2 million b/d as refinery utilization averaged 91.8% of capacity, a 0.5 percentage point uptick from the week prior. Refinery crude demand was the strongest since the week ended June 25 but was still nearly 4% below normal for this time of year. Utilization, too, remains around 0.7% below average.

Strong refinery margins on the USAC

USAC refinery utilization rose 5.5 percentage points to 91.4%, the highest since the week ended June 14, 2019, as operators sought to capitalize on strong margins. USAC Arab Light cracking margins averaged $12.79/b for the week, compared with the $11.92/b the week earlier, according to Platts Analytics data.

USGC utilization averaged 93.6%, the highest since January 2020 but flat from the week prior.

Gasoline draws extend

US gasoline inventories declined 1.4 million barrels to 227.47 million barrels, putting stocks at the lowest since the week ended Nov. 6, 2020, and 3.7% behind the five-year average.

Front-month NYEMX September RBOB n Aug. 11 settled 3.43 cents higher at $2.3022/gal.

A 1.49 million-barrel draw in the Midwest comprised the bulk of the nationwide slide, while West Coast stocks fell 760,000 barrels over the period. But these draws were pared by a respective 410,000-barrel and 510,000-barrel rise in USAC and USGC inventories.

Gasoline stocks are now more than 6% behind the five-year average in both the Midwest and USAC regions, while USGC inventories stand around 1% below normal.

Total implied demand for all products slid nearly 8% to 19.51 million b/d, a four-week low. Gasoline demand fell around 3.5% on the week to 9.43 million b/d, while distillate consumption was up 3.2% at 3.73 million b/d. Notably, demand for jet fuel plunged 22.3% to 1.28 million b/d, the lowest since the week ended June 11.

Despite the increase in demand, total distillate stocks moved higher for a second week, climbing 1.77 million barrels to 140.51 million barrels.

Front-month September ULSD climbed 2.56 cents on Aug. 11 to $2.1058/gal.