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US gasoline stocks tighten as demand sees largest uptick since June

Highlights

Gasoline stocks fall 260,000 barrels

Gasoline demand jumps 8% on week

Crude stocks climb 4.35 million barrels; exports slow

New York — US gasoline inventories saw a counter-seasonal decline in the week ended Jan. 15 amid a sharp uptick in demand, US Energy Information Administration data showed Jan. 22.

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Total gasoline inventories fell 260,000 barrels to 245.23 million barrels last week, EIA said, well-under a 4 million-barrel build typically seen in mid-January. The draw left inventories 2.3% behind the five-year average, the widest deficit since the week ended May 3, 2019.

Gasoline inventory draws were concentrated on the West Coast, where stocks declined 510,000 barrels to 3.267 million barrels. US Atlantic Coast stockpiles edged down around 40,000 barrels to 68.09 million barrels. Modest builds were seen on the US Gulf Coast and in the Midwest, however, in all regions outside of the Rockies, inventories lost ground to the five-year average.

The inventory draw comes as implied gasoline demand jumped 580,000 b/d to 8.11 million b/d, the largest one-week increase since the week ended June 19. Gasoline demand was just 6.4% behind the five-year average last week, in from 11.9% the week prior and the smallest deficit since the week ended Nov. 6.

Notably, the increase in EIA-reported demand, which is a proxy based on product disappearing from primary sources, is in line with an uptick in end-user demand seen in recent weeks. Apple mobility data shows US driving activity climbed for a second straight week last week, edging up 0.8% from the week prior.

Total distillate inventories, in contrast, showed a counter-seasonal build last week, climbing 600,000 barrels to 164.26 million barrels.

Total net crude inputs climbed 110,000 b/d to 14.76 million b/d as the nationwide utilization rate edged up half a percentage point to 82.5% of total capacity. Both refinery inputs and utilization were the strongest since March, but still lagged their respective five-year averages by 13.4% and 9.5%, respectively.

Strengthened refinery runs were supported by an uptick in margins last week, driven in large part by stronger gasoline cracks.

US Gulf Coast WTI MEH cracking margins averaged at $8.30/b in the five-days ended Jan. 15, according to S&P Global Platts Analytics, up from a month-to-date average of $7.77/b. Over the same period, the unleaded 87 gasoline crack versus WTI MEH averaged at $9.26/b, up compared with $8.58/b to-date this month and well above December levels of $5.94/b.

Crude stocks climb amid export slowdown

US commercial crude stocks climbed 4.35 million barrels last week to 486.56 million barrels, putting inventories 9.3% above the five-year average. The build ended five consecutive weeks of draws that shrunk the supply overhang from 11% above average to below 9%.

The build exceeded market expectations and added headwinds to crudes prices. Front-month NYMEX March WTI settled down 86 cents on Jan. 22 at $52.27/b.

USGC crude stocks surged 5.59 million barrels to 263.05 million barrels as exports volumes fell to a six-week low 2.25 million b/d. USGC imports were also at a six-week high after climbing 440,000 b/d last week to 1.44 million b/d, however, total US imports edged down 190,000 b/d to 6.05 million b/d.

Notably, inventories at the NYMEX delivery point of Cushing, Oklahoma, saw the largest one-week drop since May, falling 4.73 million barrels to 525 million barrels.