US gasoline inventories climbed 4.04 million barrels to 234.59 million barrels last week, as imports jumped and refinery runs edged higher, US Energy Information Administration data showed April 7.
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Gasoline imports climbed 678,000 b/d to 1.3 million b/d, with the bulk of that increase – 635,000 b/d – heading to the US Atlantic Coast, home of the New York delivery point for NYMEX RBOB futures.
NYMEX RBOB futures fell following the EIA data, with the front-month crack spread against ICE Brent crude ending at around $18.82/b April 7, down from $19.70/b April 6.
Still, that's up from minus $1.85/b the same time last year, when RBOB crack spreads were sent into negative territory by the global coronavirus lockdowns.
US gasoline crack spreads and refining margins have risen this year as the US has started to open up, driven by a steady increase in coronavirus vaccinations.
Apple Mobility data shows US driving activity climbed 2.6% last week to the highest since the week ended Sept. 11, 2020. Driving activity was up more than 156% from year-ago levels.
In contrast, lockdowns are continuing in Europe due to the slower pace of vaccinations, dampening transportation fuel demand.
Senior market analyst Edward Moya of OANDA noted that news of a "possible" link to rare cases of blood clots from the AstraZeneca vaccine already has resulted in the United Kingdom halting that specific vaccine's distribution to those under age 30.
"Europe's COVID vaccine rollout has been very disappointing and today's announcement that the UK will offer alternatives to people under 30 could lead to further vaccine hesitancy," Moya said.
The European lockdowns have helped support gasoline arbitrage economics to the USAC.
The arbitrage opened wide in February after several Texas refineries were brought down by unusually frigid temperatures. The USAC depends on gasoline from the US Gulf Coast, via the Colonial Pipeline, and from waterborne imports, primarily from Europe.
USGC refiners were operating at 83.1% of capacity the week ended April 2, according to the EIA. That was unchanged on the week, but up from just 40.9% at the height of the Texas outages the week ended Feb. 26.
Increased refinery runs helped boost USGC gasoline stocks last week by 838,000 barrels to 80.44 million barrels, putting stocks roughly on par with the five-year average, the EIA data showed.
But the largest inventory build was seen in the USAC, where stocks jumped 2.6 million barrels to 63.99 million barrels, also putting inventories are par with the five-year average.
US distillate inventories are well-supplied, relative to gasoline, which is reflected in ULSD crack spreads. The front-month ULSD crack against ICE Brent crude ending around $12.75/b April 7.
US distillate stocks climbed 1.45 million barrels to 145.55 million barrels last week, putting inventories at roughly 5% above the five-year average, and up roughly 19% on the year.
The bulk of the increase last week was seen in the USGC, where combined low and ultra low sulfur diesel stocks climbed 1.3 million barrels to 47.75 million barrels.
USGC distillate production has risen since February as Texas refiners returned to service, adding more supply to the region. Sluggish distillate exports are also adding to the surplus, as overseas demand remains depressed by coronavirus lockdowns.
US distillate exports on a four-week moving average at 903,000 b/d last week were up 154,000 b/d from the prior week. But exports were holding well above 1 million b/d in 2019, prior to the coronavirus, often reaching 1.4 to 1.5 million b/d.
The rise in refinery runs helped pull US crude stocks down by 3.53 million barrels to 498.31 million barrels last week, the EIA data showed.
Also, US crude exports climbed 260,000 b/d to 3.43 million b/d, while crude imports edged up 119,000 b/d to 6.26 million b/d, helping to draw down inventories.
The crude stock draw had little impact on NYMEX crude futures April 7, as inventories remained at a slight surplus to the five-year average.