US crude stocks drop as exports surge to 20-week high

New York — US crude inventories unexpectedly declined in the week ended Sept. 25 as exports surged to a 20-week high, US Energy Information Administration data showed Sept. 30.

Commercial crude inventories declined 1.98 million barrels last week to 492.43 million barrels, according to the EIA, narrowing the surplus to the five-year average to 12.4%, the weakest supply overhang since late May.

NYMEX November WTI settled 93 cents higher at $40.22/b on Sept. 30, while ICE November Brent slipped 8 cents lower on the day to settle at $40.95/b.

The draw was centered on the US West Coast, where stocks fell 2.56 million barrels to 51.76 million barrels, and on the US Gulf Coast, which saw inventories fall 1.49 million barrels to 263.51 million barrels.

Offsetting these declines was a 2.78 million-barrel uptick in Midwest crude supply to 143.32 million barrels. The bulk of this build stemmed from a 1.79 million-barrel increase in stocks at the NYMEX delivery point of Cushing, Oklahoma, putting inventories there at 56.07 million barrels, the highest since the week ended May 15.

The crude draw was predicated largely on a surge in weekly exports, which rose 490,000 b/d to 3.51 million b/d. This is the strongest US exports have been since early May. The uptick pushed net petroleum imports to minus 1.58 million b/d, the largest weekly deficit since mid-April.

Refinery net crude inputs climbed 300,000 b/d to 13.67 million b/d last week, helping boost utilization rates 1 percentage point higher to 75.8% of capacity. Refinery crude demand strengthened in all regions outside of the Rockies, with Midwest inputs jumping 7% on the week to 3.5 million b/d, but overall refinery demand remains very weak at more than 15% below the five-year average.

Midwest crude demand was roughly at par with the five-year average last week as refiners benefited from stronger margins.

WCS Hardisty coking margins averaged $9.88/b in the five days ended Sept. 25, according to S&P Global Platts Analytics, up compared to a September-to-date average of around $7.78/b. In contrast, USGC WTI MEH cracking margins weakened to around $4.65/b last week, down from a September-to-date average of around $5/b.

GASOLINE STOCKS CLIMB AS DEMAND FALTERS

Total gasoline stocks climbed 680,000 barrels to 228.18 million barrels last week as demand continued to trend lower. The build snapped seven consecutive weekly draws, but the surplus to the five-year average still narrowed to around 0.7%, in from 0.9% the week prior.

The four-week moving average of US gasoline demand dipped 60,000 b/d to 8.48 million b/d, the weakest since late June and nearly 9% behind year-ago levels.

NYMEX October ULSD settled 3.64 cents higher at $1.1454/gal on Sept. 30, while October ROBB finished down 9 points at 9 points at $1.2008/gal.

The bulk of the gasoline build was realized on the USWC, where stocks jumped 1.16 million barrels to a 21-week high 31.14 million barrels.

Midwest inventories were 9.3% behind the five-year average after falling 920,000 barrels on the week, while US Atlantic Coast stockpiles fell 2.8% behind the five-year average despite a 380,000-barrel build. USGC gasoline stocks were 5.9% above average last week, the weakest supply overhang since the week ended April 3.

Distillate inventories moved 3.18 million barrels lower last week to 172.76 million barrels, leaving them still 20.4% above the five-year average.

Demand for distillates fell 300,000 b/d to 3.66 million b/d, but this decline was offset in part by an uptick in exports, which climbed 170,000 b/d to a six-week high of 1.3 million b/d.