US crude stocks fall as Hurricane Delta shuts in production, exports

New York — US crude stocks moved lower last week as Hurricane Delta shut in Gulf of Mexico output and exports hit a 14-month low, US Energy Information Administration data showed Oct. 15.

US commercial crude stocks declined 3.82 million barrels in the week ended Oct. 9 to 489.11 million barrels, EIA data showed. The draw left inventories just 10% above the five-year average, the weakest supply overhang since mid-May.

The draw was concentrated on the US Gulf Coast, where stocks fell 5.12 million barrels to 256.33 million barrels, and on the US West Coast, which saw a 1.59 million-barrel draw put inventories at 52.37 million barrels.

Notably, stocks at the NYMEX delivery point of Cushing, Oklahoma, climbed 2.91 million barrels to 59.44 million barrels, the highest since the week ended May 8.

US crude production fell to 10.5 million b/d, down 500,000 b/d from the week prior and the lowest since the week ended September 4, as Hurricane Delta churned through the Gulf of Mexico, causing significant disruptions to oil and gas operations.

At peak on Oct. 10, the storm shut in 1.697 million b/d of crude and 1.692 MMcf/d of gas production, respectively representing 91.72% and 62.43% of total Gulf output, according to US Bureau of Safety and Environmental Enforcement data.

As of midday Oct. 15, approximately 440,000 b/d of crude production, or 24% of total Gulf output remained offline. S&P Global Platts Analytics projected it could take nearly two weeks to fully restore production.

Crude exports plummet

US crude exports plunged 520,000 b/d to 2.14 million b/d, the lowest since mid-August 2019, EIA data showed.

While Hurricane Delta -- which temporarily closed both LOOP and the Houston Ship Channel -- delayed some exports, weak global spot crude demand and tight arbitrage economics continued to challenge US producers.

US light sweet barrels delivered in Northeast Asia have faced stiff competition from Nigerian and Middle Eastern crudes, with cracks projected to yield between 62 cents/b and 86 cents/b in refined value over WTI from the Magellan East Houston terminal to-date in October, according to Platts Analytics data.

US refinery net crude inputs pulled back 280,000 b/c to 13.58 million b/d as total utilization fell 2 percentage points to 75.1% of capacity.

Delta had only minor impact on regional refineries as close to 1 million b/d of crude refining capacity in Louisiana was already offline ahead of the storm. Citgo Petroleum's and Phillips 66's Lake Charles refineries, representing a combined 678,000 b/d of capacity, both sustained damage from Laura and Phillips 66's 255,600 b/d Belle Chasse refinery is undergoing maintenance work.

Product inventories dip, demand ticks higher

Total gasoline inventories fell 1.63 million barrels to 225.12 million barrels. The draw was in line with seasonal norms, holding the deficit to the five-year average steady at around 0.3%.

US Atlantic Coast gasoline stocks plunged 1.91 million barrels to 59.55 million barrels, putting inventories 4.7% behind the five-year average and just off 11-month lows.

Total distillate stocks plunged 7.25 million barrels to 164.55 million barrels, EIA data showed -- the largest weekly draw since the week ended January 31, 2003. Still, distillate stocks remain more than ample, sitting 18% above the five-year average.

The draws come as refined product supplied, EIA's proxy for demand, surged 1.13 million b/d higher to 19.48 million b/d, the strongest since the week ended Aug. 21.

The surge was skewed toward industrial consumption, however, with distillate demand climbing 8% on the week to 4.18 million b/d and petrochemical feedstocks appetite up 26% at 4.16 million b./d, a 14-week high. In contrast, gasoline demand fell back nearly 4% to 8.58 million b/d.