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US refined product inventories climb as demand tests multimonth lows

Highlights

Gasoline demand weakest since June

Refinery crude demand shows unseasonable decline

Commercial crude stocks fall 680,000 barrels

New York — US refined product inventories climbed in the week ended Nov. 27 as the pandemic blunted demand during the typically travel-heavy US Thanksgiving Day holiday weekend.

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Total US gasoline inventories climbed 3.49 million barrels to 233.64 million barrels, while distillate stocks moved 3.24 million barrels higher to 145.87 million barrels.

While gasoline inventories typically climb in late-November, last week's build was the largest weekly uptick since early April, when state and local governments were ramping up pandemic lockdowns. The build pushed stocks 4.4% above the five-year average, opening the widest surplus since the week ended Aug. 21.

Total product supplied, EIA's proxy for demand, averaged at 18.47 million b/d last week, down 3.6% from the week prior and 12.5% behind year-ago levels.

Demand was lower for most refined product categories. Distillate consumption, which typically declines during the holiday-shortened week, was down more than 9% from the week prior at 3.79 million b/d. Notably, distillate consumption was still 7% above year-ago levels, up from a 5% deficit the week prior.

Implied demand for gasoline declined 1.9% to 7.97 million b/d last week, putting it at the lowest since the week ended June 12 and nearly 12% behind year-ago levels.

Overall US road travel for the Thanksgiving holiday was down 35% from last year, according to Arrivalist's Daily Travel Index. Apple Mobility Index data showed weekly driving activity fell to the lowest since the week ended May 22.

Weak gasoline demand was in part offset by an uptick in demand for jet fuel. According to Transportation Security Administration checkpoint data, the number of people flying for the holiday weekend reached levels not seen since early March, averaging over 1 million per day starting Nov. 20, the day before the Thanksgiving holiday.

This uptick in passengers was not borne out in the EIA data, which showed implied jet fuel demand edged down 3% to 1.13 million b/d, leaving it more than 42% behind year-ago levels.

Gasoline stocks moved higher in all regions outside of the US West Coast, which saw a 680,000-barrel decline. US Gulf Coast gasoline inventories were 2.4% above the five-year average after climbing 2.65 million barrels to 82.06 million barrels, while US Atlantic Coast stocks were 8.5% above normal after a 790,000-barrel build put them at a 15-week high 64.51 million barrels.

Total distillate stockpiles climbed 3.24 million barrels to 145.87 million barrels. The build snapped 10consecutive weekly draws but was below seasonal norms. The surplus to the five-year average edged down to 8.4%, the lowest since the week ended April 24.

Crude inputs dip, draw slows

A slowdown in refinery runs likely blunted the product build. Refinery net crude inputs slid 250,000 b/d to 14.01 million b/d amid a 0.5 percentage point decline in refinery utilization to 78.2% of total capacity. The unseasonable pullback left refinery crude demand 17% behind average.

Weakened refinery demand also likely blunted a seasonal crude draw. Commercial crude oil inventories were down just 680,000 barrels last week at 488.04 million barrels, well below typical draws of around 3.5 million barrels over the past five years.

The US draw comes as weekly exports surged 22% to 3.46 million b/d, a five-week high. Despite the uptick, US crude exports are expected to remain depressed for the foreseeable future.

Through November, the US exported an average of 2.48 million b/d of crude and condensate, the lowest monthly level since July 2019, when monthly exports averaged 2.44 million b/d, and down over 255,000 b/d from the October average, according to preliminary data from Kpler, a data intelligence company. This marks the third consecutive month US crude exports have fallen, a phenomena in-line with expectations of lower US crude exports toward the end of 2020 amid declines in shale production.

S&P Global Platts Analytics expects total US exports to average at 2.2 million b/d through 2021. By comparison, through the first 11 months of 2020, US crude exports have averaged 2.918 million b/d, according to Kpler data.