US commercial crude stocks hit all-time high as GOM production returns

New York — US crude stocks climbed during the week ended June 19 as rising production and weak refinery demand outshined resurgent exports, US Energy Information Administration data showed June 24.

US commercial crude stocks climbed 1.44 million barrels to a record-high 540.72 million barrels in the week ended June 19, EIA said. The build pushed inventories to 16.2% above the five-year average for this time of year.

An additional 1.99 million barrels of crude entered the Strategic Petroleum Reserve, EIA said, pushing inventories there to 653.72 million barrels.

The return of US Gulf of Mexico production following Tropical Storm Cristobal pushed total US crude production up 500,000 b/d on the week to 11 million b/d.

By June 12, the day prior to the beginning of the EIA reporting period, just 6.5% of GOM production remained offline as a result of the storm, according to US Bureau of Safety and Environmental Enforcement data. Offshore shut-ins peaked at around 35% of total capacity as the storm made landfall on June 7, taking roughly 635,000 b/d of crude production offline.

Outside of the storm-related decline in the week ended June 12, US production last week was the lowest since October 2018. Total output is now down by 2.1 million b/d from its mid-March peak, a 16% decline.

However, a slowdown in the rate of rig count declines could indicate US production is nearing a bottom. The US oil and gas rig count fell by seven week on week to 292, rig data provider Enverus said June 18, the first single-digit decline since the first week of March, before the world felt the effects of the coronavirus pandemic and oil price dispute between Saudi Arabia and Russia.

USGC crude stock swell to new high

Rising GOM production helped push US Gulf Coast crude inventories up 510,000 barrels to 307.99 million barrels, an all-time high for the region. Notably, the USGC build comes even as exports surged nearly 700,000 b/d to a four-week high of 3.16 million b/d.

US West Coast inventories climbed 910,000 barrels on the week to 56.75 million barrels amid a surge in imports. Inbound crude volumes reached 6.17 million barrels in the week ended June 19, according the Kpler trade flow data, the highest since the week ended March 20.

Crude stocks at the NYMEX delivery point of Cushing, Oklahoma, declined for a seventh straight week, falling 990,000 barrels to 45.85 million barrels.

Refinery utilization inched up 0.8 percentage point to 74.6% of capacity, pulling net crude inputs up 240,000 b/d to 13.84 million b/d. While refinery crude demand has steadily trended higher since early May, net inputs are still very weak at 18.7% behind the five-year average.

But improving margins could see refinery demand accelerate in coming weeks. US Gulf Coast cracking margins for WTI MEH averaged at around $5.75/b last week, the strongest since March and up from an average of $3.14/b last month. On the US Atlantic Coast, Bakken crude cracking margins climbed to around $4/b after having averaged at minus $1.33/b in May.

Gasoline draws extend as demand climbs

Total US gasoline stocks dipped 1.67 million barrels to 255.32 million barrels last week, narrowing the surplus to the five-year average to lowest since early May at around 9%.

Product supplied for gasoline, a proxy for demand, climbed 740,000 b/d on the week to 8.61 million b/d, the highest since mid-March. Demand is now just 9% under year-ago levels for mid-June, in from a deficit of more than 48% during the week ended April 3.

Notably, gasoline exports were around 42% lower on the week at 290,000 b/d, underscoring the impact that the demand recovery has had on inventories.

In contrast, distillate stocks edged 250,000 barrels higher to 174.72 million barrels as demand eased 90,000 b/d to 3.47 million b/d.