US gasoline stocks show surprise build as demand slows: EIA

US gasoline inventories unexpectedly climbed in the week ended Aug. 13, US Energy Information Administration data showed Aug. 18, amid a continued slowdown in demand.

Total US gasoline inventories climbed 700,000 barrels to 228.17 million barrels, EIA data showed, snapping four consecutive weekly draws and narrowing the deficit to the five-year average to around 3%.

The build ran counter to market expectations. American Petroleum Institute data released late Aug. 17 showed US gasoline stocks down 1.2 million barrels, while analysts surveyed by S&P Global Platts on Aug. 16 had called for a 2.3 million-barrel decline over the period.

The build weighed on NYMEX RBOB futures despite a significant draw on the US Atlantic Coast, home to the NYMEX delivery point of New York Harbor. USAC inventories fell 2.91 million barrels to 58.7 million barrels, a nearly two-year low and 10.7% behind the five-year average. NYMEX September RBOB settled 1.79 cents lower Aug. 18 at $2.1477/gal.

The build also weighed heavily on gasoline cracks. The ICE New York Harbor RBOB crack versus Brent fell to around $16.35/b in afternoon trading, on pace for the lowest close since June 16.

The nationwide gasoline build was concentrated on the US Gulf Coast, which saw stocks climb 2.12 million barrels to 84.69 million barrels, and in the Midwest, where inventories moved 1.15 million barrels higher to 49.12 million barrels.

The build comes as implied demand for gasoline declined for a second straight week, falling 1% to 9.33 million b/d.

This decline in implied demand tracks consumer-level data. Apple mobility data shows US driving activity averaged 159% of the index's January 2020 baseline in the week ended Aug. 13, down 1 percentage point from the week prior. This third consecutive slide in weekly driving activity puts the index nearly 7 percentage points below its all-time high seen in mid-July.

Notably, total implied demand for all refined products climbed 10% to a six-week-high 21.46 million b/d. While the bulk of this increase was in the "other oils" category, demand for jet fuel and distillates showed respective 31% and 16% increases from the week prior. Implied demand for jet fuel averaged 1.67 million b/d, the strongest since the week ended Feb. 28, 2020, while distillate demand hit a three-week high of 4.32 million b/d.

Nationwide distillate stocks fell 2.7 million barrels to 137.81 million barrels, a seven-week low, but jet stocks edged 90,000 barrels higher to 42.99 million barrels. Distillate prices traced the broader energy complex lower despite the inventory draw, and NYMEX September ULSD settled down 1.49 cents at $2.0212/gal.

CRUDE STOCKS DRAW ON STRONG EXPORTS

Total US commercial crude stocks fell 3.23 million barrels to 435.54 million barrels, EIA said, leaving stocks around 6% behind the five-year average, putting the deficit at an eight-week low but still roughly in line with recent weeks.

Midwest inventories declined 2.24 million barrels to 114.82 million barrels, leaving stocks at the lowest since the week ended Oct. 5, 2018. The Midwest draw included a 980,000 decline in stockpiles at the NYMEX delivery point of Cushing, Oklahoma.

NYMEX September WTI settled $1.13 lower on the day Aug. 18 at $65.46/b, while ICE October Brent slid 80 cents to $68.23/b.

USGC inventories moved 1.86 million barrels lower over the week to 240.1 million barrels.

The crude draw was predicated in large part on a 770,000 b/d uptick in exports to 3.43 million b/d, a five-week high.

But an unexpected decline in refinery demand blunted the draw. Total net crude inputs slid 1.2% to 16 million b/d despite overall refinery utilization rising to 92.2% of capacity, up 0.4 percentage point from the week prior.

The divergence in net inputs and utilization is likely a result of refiners running downstream units to take advantage of strong gasoline margins. The USGC unleaded 87 crack versus WTI MEH averaged $24.43/b in the five days ended Aug. 13, S&P Global Platts Analytics data shows, 50 cents/b above the August to-date average of $23.43/b.

Further blunting the crude inventory draw was a 100,000 b/d increase in production, which hit a four-week-high 11.4 million b/d last week.