US crude inventories fell 12.5 million barrels the week ended May 19 as refiners continued to boost runs while export demand remained strong, US Energy Information Administration data showed May 24.
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Analysts polled by S&P Global Commodity Insights had expected crude inventories to decline on average by 500,000 barrels, although the American Petroleum Institute late May 23 reported a 6.8 million barrel decline in inventories.
US crude production was up 100,000 b/d at 12.3 million b/d, remaining within a well-established 12.2 million-12.3 million b/d range seen since the beginning of the year.
Domestic demand was higher, as US net refinery inputs increased 79,000 b/d to 16.1 million b/d. However, inputs fell 131,000 b/d to 8.9 million b/d in the US Gulf Coast, where the bulk of the crude inventory decline was seen. USGC crude stocks fell 11.4 million barrels to 244.8 million barrels the week ended May 19.
US crude imports fell 1 million b/d to 5.9 million b/d, with USGC imports down 441,000 b/d at 1 million b/d, the EIA data showed. And US crude exports, the bulk of which come out of the USGC, climbed 239,000 b/d to 4.6 million b/d.
The commercial crude stock draw in theory should have been limited by the release of 1.6 million barrels from the US Strategic Petroleum Reserve, which would either be exported, processed in a refinery or placed into commercial storage.
Inventories from the SPR have fallen 13.6 million barrels since the week ended March 24 as part of a congressionally mandated sale of 26 million barrels, with deliveries to be completed by the end of June.
Weekly data can be volatile, but longer term trends have been showing higher refinery runs and strong export demand.
US net crude inputs were up 1.1 million b/d since early March, with 919,000 b/d of that on the USGC, the EIA data shows.
S&P Global analysts expected US refinery outages to have fallen 240,000 b/d to 650,000 b/d for the week ended May 19, and expect outages to fall to 530,000 b/d for the week ending May 26.
Kpler data shows the US exporting 121 million barrels of crude so far in May, on par with April levels.
While the spot arbitrage for WTI MEH into Europe is currently closed, the arbitrage to Asia is open, with WTI MEH at an advantage to Tapis, S&P Global data shows. Likewise, Mars is at an advantage to Dubai in Asia, the data shows.
Kpler data also shows an increase in US waterborne crude imports in May, likely to meet increased demand from refiners returning from maintenance.
Gasoline stocks down
US gasoline stocks continued to tighten last week, falling 2.1 million barrels to 216.3 million barrels, the EIA data showed. However, stocks climbed 751,000 barrels on the US Atlantic Coast, home of the New York delivery point for NYMEX RBOB.
RBOB crack spreads have been on an upward trend since May 5 on tight inventories. US stocks have fallen 26 million barrels since mid-February, bringing stocks to an 8% deficit to the five-year average. USAC stocks at 53.1 million barrels the week ended May 19 were 16% below the five-year average.
The NYMEX front-month RBOB crack was trading around $35.52/b late May 24, up from $27.48/b May 5.
US gasoline production jumped 833,000 b/d to 10.3 million b/d the week ended May 19 as refiners shifted yields to meet demand, and take advantage of relatively higher prices. The NYMEX front-month ULSD crack spread was trading around $26.48/b late May 24.
US gasoline exports slipped 219,000 b/d last week to 711,000 b/d, although that was balanced out by a 204,000 b/d drop in imports to 603,000 b/d.
US distillate stocks fell 561,000 barrels last week to 105.7 million barrels the week ended May 19, the EIA data showed. Stocks on the USAC fell 1.9 million barrels to 25.1 million barrels, expanding the deficit to the five-year average to 31%.
The NYMEX ULSD crack spread edged higher May 24 on the data as the market has been focused on gasoline inventories heading into peak summer season.
Spot demand for distillates, such as diesel, has moderated since the winter-heating season, with spot prices in the US and in Europe under downward pressure.