New York — US crude oil stock stocks likely declined last week amid an uptick in export activity and strong refiner demand, an S&P Global Platts analysis showed Monday.

Commercial crude stocks are expected to draw 3.1 million barrels to around 437.4 million barrels during the week ended August 16, according to analysts surveyed by Platts. The expected draw down would mark a return to normalcy for crude inventories that have shown two weeks of back-to-back counter-seasonal builds. If confirmed by US Energy Information Administration data on Wednesday, the draw would reverse a widening crude supply overhang, paring back stocks to 3.2% above the five-year average from 3.5% during the week prior.

Refinery utilization is expected to tick 0.2 percentage points higher to 95% of capacity, analysts said, contributing to the nationwide crude draw.

While refinery runs unexpectedly stumbled in early August, they are likely to continue to climb for the rest of the month as turnaround work approaches a seasonal low. Offline crude distillation capacity, which stood at 1.48 million b/d last week, is expected to fall to 1.28 million b/d during the week ended August 30, according to S&P Global Platts Analytics data. Shoulder-season turnaround work is then expected to rapidly ramp back up as refiners retool ahead of expected winter heating demand.

An uptick in export activity last week likely further pressured crude stocks. Outbound crude volumes were pegged at 2.90 million b/d according to cFlow, Platts trade flow software, an increase of around 220,000 b/d from an EIA-reported 2.68 million b/d during week prior.

Exports to Asia reached 12.23 million barrels last week, up sharply from 5.27 million barrels during the week prior, while Europe-bound volumes were down 1.61 million barrels at 3.27 million barrels.

Refined product inventories likely fell last week despite the expected uptick in refinery runs. Total gasoline stocks are expected down 1.6 million barrels at 232.2 million barrels, and distillate tanks are expected to draw about 200,000 barrels to 135.3 million barrels, analysts said.

While gasoline stocks typically come under pressure at this time of year due to strong summer driving demand, the nationwide gasoline appetite has been exceptional in recent weeks. Total product supplied for gasoline reached a fresh all-time high 9.93 million b/d during the week ended August 9, EIA reported, surpassing the previous record high seen in mid-June.

Yet despite the strong seasonal demand gasoline inventories have held onto a robust supply overhang due to a flood of imports. Inventories stood at around 2% above the five-year average in July, and jumped to nearly 4% above average in early August. The four-week average of gasoline imports was almost 44% above the five-year average at 1.03 million b/d during the week ended August 9.

The build out of crude pipeline capacity to US Gulf Coast export hubs has bolstered inland crude prices, narrowing US distillate cracks against WTI. The prompt ULSD USGC crack versus WTI averaged at around $20.13/b last week, in from $20.77/b the week prior, Platts data showed.

Plains All American announced earlier this month that it was preparing to begin shipments on its Cactus II pipeline, bringing up to 670,000 b/d of Permian crude to the Gulf Coast export market by year's end. The 400,000 b/d EPIC and Philips 66's Gary Oak pipelines are also slated to come online before the end of the year.

Discounts for WTI Midland narrowed to around $1.70/b compared with WTI Houston last week, according to Platts data, in from around $2.75/b the week prior and over $5/b in July.

In contrast, a tighter overall USGC distillate supply picture has supported rising cracks against imported crudes. The USGC ULSD crack against Brent strengthened around 35 cents/b week on week to about $16.50/b. USGC combined low and ultra-low sulfur distillate inventories were more than 11% below the five-year average during the week ended August 9, according to EIA data.

-- Chris van Moessner, christopher.vanmoessner@spglobal.com

-- Edited by Benjamin Morse, newsdesk@spglobal.com