US crude oil inventory builds likely extend amid weak refinery demand

Counter-seasonal US crude oil inventory builds likely extended in the week to Jan. 13 amid continued weak refinery demand, analysts surveyed by S&P Global Commodity Insights said Jan. 17.

US commercial crude stocks likely climbed 900,000 barrels to around 440.5 million barrels over the period, analysts said. The build would put inventories 1.1% above the five-year average of US Energy Information Administration data, opening the widest surplus since April 2021.

Continued weak refinery demand likely contributed to the counter seasonal build. Total refinery utilization is expected to have climbed 2.8 percentage points during the week to average around 86.9% of capacity. At that level runs would be more than 3% behind average for this time of year and down 5.1 percentage points from mid-December, ahead of a severe cold snap that impacted a combined 6 million b/d of distillation capacity at over 20 facilities.

Total refinery net crude inputs, meanwhile, are forecast by S&P Global Commodity Insights to have averaged around 15.6 million b/d in the week to Jan. 13, holding around 4% below normal for this time of year.

While most of the December outages have been restored, a handful of plants were still dealing with lingering impacts from the deep freeze. Marathon Petroleum's 593,000 b/d refinery in Galveston Bay was still running at "minimal rates" as of Jan. 10, and the operator was considering moving up a major planned turnaround due to the already reduced run rates.

Meanwhile, Midwest refiners were working to restore run rates following a long spell of rain and winter storms.

Weeks of reduced refinery runs have added headwinds to refined product output. Total gasoline stocks are expected to have climbed 1.4 million barrels in the week to Jun. 13, but that build would leave them 8.6% behind the five-year average, out from 7.8% the week prior and the widest deficit since late June.

Widespread refinery outages would have likely resulted in even tighter gasoline stocks if not for a precipitous decline in demand. Total product supplied for gasoline, the EIA's proxy for demand, moved sharply lower following the Christmas holiday and has averaged around 9% below normal for the past two weeks.

Nationwide distillate stocks likely dipped 500,000 barrels to around 117.2 million barrels, analysts said.