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US gasoline stock draws likely resume as demand edges higher

Highlights

Gasoline stocks expected down 500,000 barrels

Crude stocks likely dip 3.9 million barrels

Exports strongest since February: cFlow

New York — US gasoline inventory draws likely resumed in the week ended April 30, an S&P Global Platts survey of analysts showed May 3, amid an uptick in end-user demand.

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Total US gasoline stocks are expected to have declined 500,000 barrels last week to around 234.6 million barrels, analysts said. The draw would snap four consecutive weekly builds that had pushed inventories to their highest since late February, though would narrow the deficit to the five-year average of US Energy Information Administration data to 2.4% from 2.6% the week prior.

The expected decline comes amid signs that US gasoline consumption is edging higher ahead of the high-demand summer driving season.

Apple Mobility data shows US driving activity climbed to a four-week high during the week ended April 30. EIA data shows the four-week moving average of implied gasoline demand during the week ended April 23 was 4.4% above the five-year average, the widest surplus to the average since October 2019.

Widespread COVID-19 vaccination efforts have seen a number of states and municipalities announce the lifting of social restrictions, which should herald higher demand in coming months.

New York City Mayor Bill de Blasio announced April 29 plans to lift all restrictions on restaurants, retail and business and "fully reopen" on July 1. California's state government has announced a June 15 target date for reopening.

Enterprise co-CEO Jim Teague said May 3 he sees US gasoline demand becoming healthy again, and global oil demand should recover to 100 million b/d by the end of 2021 and go higher next year.

"Traffic is already back to what some term as awful," Teague said of Houston highways during the earnings call. "For the first time, I see traffic jams as beautiful."

Refinery utilization grows

Analysts expect total refinery utilization to reach around 86% of capacity, an increase of 0.6 percentage point from the week prior, while S&P Global Platts Analytics pegged refinery net crude inputs at above 15.2 million b/d.

Refinery runs were likely helped by improved margins last week. US Gulf Coast cracking margins for WTI MEH averaged $13.06/b in the five days ended April 30, Platts Analytics data shows, an increase from around $12.51/b during the week prior.

These stronger margins were underpinned by firming gasoline cracks. The USGC unleaded 87 crack versus WTI MEH averaged around $19.64/b last week, up from $19.11/b the week prior.

Distillate cracks were also higher amid steady seasonal demand. The USGC ULSD crack versus WTI MEH averaged $14.43/b, up 85 cents from the week prior.

Nationwide distillate stocks are expected to have declined 1.6 million barrels to around 137.5 million barrels, analysts said.

Crude stocks fall as exports surge

Rising refinery demand likely contributed to an expected 3.9 million-barrel draw in nationwide crude stocks, leaving them around 1% behind the five-year average at 489.2 million barrels.

US crude exports averaged 3.8 million b/d in the week ended April 30, according to data from cFlow, Platts trade-flow software. This marks an increase of 1.3 million b/d from the 2.54 million b/d reported by EIA during the week prior, and would put outbound crude flows at their highest since the week ended Feb. 12.

The export surge is predicated in large part on a nearly threefold uptick in European-bound volumes to 2.23 million b/d, while Asia-bound cargos declined for a fourth straight week to around 700,000 b/d.

US crude exports to pandemic-stricken India plunged nearly 80% to around 600,000 b/d last week, cFlow shows.