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US gasoline stocks plunge as refineries struggle to ramp up post Ida: EIA data

Highlights

Gasoline stocks fall 7.22 million barrels

Refinery net inputs lowest since polar vortex

Crude stocks slide amid record production slowdown

US gasoline inventories saw their biggest draw since late February in the week ended Sept. 3, US Energy Information Administration data showed Sept. 9, as Hurricane Ida forced the closure of the bulk of Louisiana refinery capacity.

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Nationwide gasoline inventories plunged 7.22 million barrels to 220 million barrels, the EIA said, putting them at the lowest since November 2019 and 4.5% behind the five-year average.

It was the largest one-week drop in gasoline stocks since late February, when severe winter weather wreaked havoc on Texas refinery infrastructure.

The US Atlantic Coast saw a 3.58 million-barrel draw down in gasoline inventories to 54.08 million barrels, the lowest since November 2017 and 14.5% behind the five-year average.

US Gulf Coast gasoline stocks declined 3.16 million barrels to 81.81 million barrels but remained relatively ample at 1.6% above the five-year average.

Hurricane Ida forced the closure of the bulk of Louisiana's refinery capacity, taking some 2.2 million b/d of throughput volume offline during the reporting period. While most of the refineries were largely unscathed by the storm itself, widespread damage to the region's electrical grid left many facilities without power, extending downtimes.

Nationwide refinery net crude inputs fell 1.64 million b/d to 14.3 million b/d, EIA said, as utilization fell to 81.9% of capacity, down 9.4 percentage points from the week prior. USGC refinery utilization was down 16.7 percentage points at 75.7% of capacity and was the lowest since the week ended March 12.

Likely exacerbating the USAC gasoline draw, Colonial Pipeline shut its Line 1 and 2 systems ahead of Ida's landfall Aug. 29, temporarily halting the flow of key arteries that provide about 45% of all the gasoline and diesel fuel consumed on the East Coast.

Adding further pressure to inventories, implied demand for gasoline edged up to 9.61 million b/d, a five-week high.

US driving activity edged slightly higher in the week ended Sept. 3 ahead of a three-day US holiday weekend. Apple's mobility data shows activity averaged 156% of the January 2020 baseline, up from 155.9% the week prior.

Notably demand was lower for all other refined product categories, and total product supplied for all products was down more than 12.5% on the week at 19.95 million b/d.

Nationwide distillate stocks declined 3.14 million barrels to 133.59 million barrels

US crude stocks slide amid record production slowdown

Total US commercial crude stocks fell 1.53 million barrels in the week ended Sept. 3 to 423.87 million barrels, the EIA said, leaving them around 6% behind normal for this time of year.

A 2.59 million-barrel USGC draw comprised the bulk of the nationwide decline. Notably inventories at Cushing, Oklahoma, the delivery point for the NYMEX WTI contract, climbed 1.92 million barrels to 36.42 million barrels, a seven-week high.

The inventory slide comes as total US crude output fell 1.5 million b/d or 13% to 10 million b/d, the lowest since the week ended Feb. 19. It was the largest outright weekly slide in oil production in records dating back to 1983, though on a percentage basis it was the third-largest weekly decline on record. Weekly US crude production declined 19.9% in the week ended Sept. 5, 2008, in the wake of Hurricane Ike and by 19.7% in the week ended Sept. 2, 2005, following Hurricane Katrina.

The storm caused significant damage to coastal infrastructure that has hampered platform surveys and repairs, contributing to extended timelines for production restarts. On Sept. 3, the final day of the inventory reporting period, BSEE reported 93.33% of crude output remained offline, and as of the most recent update Sept. 9 still 1.392 million b/d, or 76.48%, of the total was shut in.

The impact on regional crude production is significant enough that the White House, citing concerns that a lack of refinery feedstock could lead to fuel shortages, authorized the release of crude from the US Strategic Petroleum Reserve.

As of Sept. 9, the Department of Energy had authorized the release of at least 1.8 million barrels of SPR crude to ExxonMobil and Placid Refining's refineries in Baton Rouge. But as of Sept. 3, the final day of the EIA reporting period, no barrels had left the reserve and SPR stocks were reported flat on the week at 621.3 million barrels.