US crude stocks fall as Gulf Coast imports slow: EIA

New York — US crude stocks edged lower during the week ended Aug. 14 amid a slowdown in Gulf Coast imports and refinery demand, US Energy Information Administration data showed Aug. 19.

Commercial crude inventories declined 1.63 million barrels to 512.45 million barrels, according to EIA data, holding the surplus to the five-year average steady at around 15%.

The bulk of the draw was realized on the US Gulf Coast, where stocks moved 2.24 million barrels lower to 279.17 million barrels. Inventories at the NYEMX delivery point of Cushing, Oklahoma, slipped 610,000 barrels lower to 52.68 million barrels, while crude stocks in the broader Midwest region were down just 560,000 barrels on the week.

Downward-trending imports contributed to the USGC draw. While weekly USGC imports ticked 160,000 b/d higher to 1.39 million b/d, the four-week moving average fell to 1.35 million b/d, the lowest since November 2019.

However, a steady ramp up of inflows of Canadian crude has held nationwide imports steady at around 5.6 million b/d in recent weeks. The four-week moving average of Canadian crude edged up to 3.47 million b/d last week, EIA data showed, the highest since the week ended March 27.

The lowered imports offset a steep decline in exports, which plunged 1 million b/d to 2.14 million b/d. Exports were the weakest since the week ended Aug. 2, 2019.

While exports have languished at below 3 million b/d for most of the summer, they are likely to ramp up in coming weeks as state-owned Chinese oil refiners have returned to buying US crude oil for September loading.

At least seven China-bound cargoes, carrying some 14 million barrels of crude, have been scheduled for September loading in the US Gulf Coast in recent days, according to S&P Global Platts fixtures data. More is likely on the way, with a maximum of 10 VLCCs, or 20 million barrels of crude, that can be sent.

US crude shipments to China rose to 3.5 million barrels in the week ended Aug. 14, data from cFlow, Platts trade-flow software showed, after zero the week prior.

Refinery demand stumbles amid weak margins

Total refinery utilization was down just 0.1 percentage point week on week at 80.9% of total capacity last week, but refinery crude demand saw its biggest one-week drop since early May. Net crude inputs dropped 170,000 b/d to 14.49 million b/d, snapping three weeks of rising inputs and putting demand 16.5% behind the five-year average for this time of year.

Margins remain very weak amid tepid refined product demand. US Gulf Coast WTI MEH cracking margins have averaged to date in August around $4.80/b, S&P Global Platts Analytics data shows, down from a July average of $5.22/b.

Total product supplied, a proxy for demand, fell to 17.16 million b/d last week, down 2.21 million b/d from the week prior and the lowest since late May.

Gasoline demand was down 3% on the week at 8.63 million b/d, while distillate demand fell 16% to 3.25 million b/d.

But gasoline inventories still declined 3.32 million barrels to 243.76 million barrels as exports climbed to a 16-week high 810,000 b/d. The draw left stocks 6.5% above the five-year average, the narrowest surplus since late March.\

Distillate stocks, in contrast, edged 150,000 barrels higher to 177.81 million barrels. But despite the build, the surplus to the five-year average narrowed to 24%, in from 25% the week prior.