US crude stock draw likely extends as exports push to three-week high

New York — US crude inventory declines likely extended during the week ended Dec. 18 amid an uptick in exports, an S&P Global Platts analysis showed Dec. 21.

Commercial crude stocks are expected to have declined 4.7 million barrels to around 495.4 million barrels last week, analysts surveyed by Platts said. The draw would leave inventories just shy of 10% above the five-year average of US Energy Information Administration data, in from 10.3% the week prior.

The draw comes as exports climbed to 3.27 million b/d, according to data from cFlow, Platts trade flow software. The cFlow figure marks a 650,000 b/d uptick in exports from an EIA -reported 2.63 million b/d averaged during the week prior and would put outbound crude volumes at the highest since the week ended Nov. 27.

Nationwide refinery utilization likely climbed to 79.8% of total capacity last week, up 0.7 percentage point from the week prior. While the expected increase in refinery runs would add pressure to crude stocks, refinery runs would remain historically weak at 14.5% behind the five-year average.

Refinery margins moved higher last week, driven in large part by firming gasoline cracks. US Gulf Coast cracking margins for WTI MEH averaged at $6.97/b in the five-days ended Dec. 18, up compared with a December to-date average of $6.20/b, according to S&P Global Platts Analytics data. While in the Midwest, Bakken crude cracking margins averaged at $8.31/b last week, compared with a December to-date average of $6.24/b.

According to data published on Dec. 17 by the US Automotive Club AAA, average gasoline prices across the US gained 8 cents/gal on the month in anticipation of the upcoming holiday season, pushing regular-grade gasoline to $2.20/gal.

This increase was reflected in product cracks. The crack spread for unleaded 87 gasoline versus WTI Cushing in the Midwest averaged at $5.13/b last week, Platts Analytics data shows, more than double the December to-date average of $2.10/b. On the Atlantic Coast, the unleaded 87 crack against Brent averaged at $7.14/b, up from a December to-date average of $6.09/b, and USGC unleaded 87 averaged at $6.19/b compared with WTI MEH, up compared with $5.25/b for the month.

Stronger refinery incentives likely spurred an increase in gasoline production that, coupled with pandemic blunted demand, contributed to an analyst-expected 1.4 million barrel increase in gasoline stocks last week. The build would put inventories at around 240.3 million barrels, the highest since the week ended Aug. 14 and 4.5% above the five-year average.

Apple Mobility data shows US driving activity was at a four-week high last week after climbing for a second straight week.

An uptick in gasoline demand would be in line with seasonal norms as EIA data shows that gasoline consumption typically climbs through mid-December in the run up to the end-of-year holidays, but then declines during the second half of the month. However, any uptick in driving activity is likely to leave gasoline demand well below normal as EIA data shows demand was more than 15% behind year-ago levels during the week ended Dec. 11.

Distillate inventories likely declined 1.1 million barrels to 150.2 million barrels, analysts said. The draw would snap a three-week build that pushed stockpiles to the highest since October and would leave inventories around 10.5% behind the five-year average.