ANALYSIS: US crude inventories decline as refinery demand, exports edge higher

New York — US crude oil inventories edged lower in the week ended Nov. 20 amid an uptick in refinery demand and exports, US Energy Information Administration data showed Nov. 25.

Total commercial crude stocks declined 750,000 barrels in the week ended Nov. 20 to 488.72 million barrels, EIA data showed. The counter-seasonal draw narrowed the surplus to the five-year average to 6.2%, the weakest since early April.

Crude stocks were lower across all regions outside the US Gulf Coast, but the draw was concentrated at the NYMEX delivery point of Cushing, Oklahoma, where inventories declined 1.72 million barrels to a six-week-low 59.89 million barrels. The Cushing draw pulled broader Midwest stocks down 1.91 million barrels to 146.25 million barrels.

In contrast, USGC crude stocks climbed 2.02 million barrels to 262.82 million barrels, the highest since late September.

Total crude exports edged up 80,000 b/d to a four-week high 2.83 million b/d, while imports were down 30,000 b/d from the week prior at 5.23 million b/d.

Refinery net crude inputs jumped 420,000 b/d to 14.26 million b/d as total utilization climbed 1.3 percentage points to 78.7% of capacity. Refinery crude demand was the strongest since the week ended Aug. 21 but was still nearly 13% behind year-ago levels.

Refinery utilization typically climbs in late fall as shoulder season maintenance schedules ease and operators ramp up to meet winter product demand. However, demand destruction arising from the coronavirus pandemic continues to take its toll on refining margins, adding headwinds to the seasonal rebound.

Gasoline demand continues to decline

On the US Gulf Coast, cracking margins for WTI MEH averaged $5.52/b for the week ended Nov. 20, according to S&P Global Platts Analytics margin data, down sharply from Q4 2019 margins of $11.27/b.

Total product supplied, EIA's proxy for demand, fell 410,000 b/d to 19.16 million b/d, putting it more than 9% behind year-ago levels and around 5% below the five-year average.

Gasoline demand has been especially hard hit as a resurgence of COVID-19 cases has led to partial shutdowns and lower personal mobility in many regions. Implied gasoline consumption edged down 130,000 b/d to 8.13 million b/d last week, the lowest since the week ended June 12 and nearly 12% behind year-ago levels.

Apple Mobility data accessed by Platts shows that US driving activity in the week ended Nov. 20 was the lowest since mid-May.

Total US gasoline inventories climbed 2.18 million barrels to 230.15 million barrels, a 10-week high. Notably, USGC gasoline stocks fell 0.5% behind the five-year average after edging down 690,000 barrels to 79.41 million barrels, marking the first time since late March that regional gasoline stocks have been below normal.

Weekly jet fuel demand climbed to 1.17 million b/d, pushing the four-week moving average to 1.1 million b/d - the strongest since the week ended April 3.

The Thanksgiving travel period is historically among the busiest times for air carriers in the US, confirmed by demand projections by trade association Airlines for America. While the group has not released its Thanksgiving travel projections for 2020, it expected 31.6 million passengers to travel by air for the holiday in 2019.

Jet fuel stocks established two-week lows in the week ended Nov. 20, with volumes falling by 156,000 barrels to 37.142 million barrels.

Total distillate inventories fell 1.44 million barrels to 142.63 million barrels. The tenth consecutive weekly draw left stocks 37 million barrels below their most recent high in early September, and has narrowed the surplus to the five-year average to 8.6% from as much as 22% in early October.