New York — Counter-seasonal US refined product builds likely extended during the week ended March 26, amid an uptick in refinery runs, analysts surveyed by S&P Global Platts said March 29.
Total gasoline stocks are expected to have climbed 1 million barrels last week to 233.3 million barrels, analysts said, narrowing the deficit to the five-year average of US Energy Information Administration data to 3.2% from 3.7% the week prior. Distillate stocks are expected 600,000 barrels higher at around 142.2 million barrels, leaving them 2.4% above average -- the widest surplus since mid-February.
Refined product stocks typically decline during this time of year as shoulder-season maintenance weighs on refinery runs. Over the past five years, gasoline stocks have seen a typical draw of around 300,000 barrels and distillate inventories usually decline around 1.4 million barrels.
The expected product builds come despite signs of rising demand.
The warmer weather combined with increased access to the three US-approved vaccines have made many feel more comfortable about diminishing contagion risks, releasing pent-up driving demand by those who have been isolating in their home for the past year.
Apple Mobility data shows US driving activity climbed 3.3% last week and was the strongest since the week ended Sept. 18. Driving activity was nearly 138% above year-ago levels, which coincided with the ramp up of the initial wave of pandemic lockdowns in several states.
Between May and July, S&P Platts Global Analytics expects global oil demand to increase by 7.2 million, far surpassing the historical demand gain of about 2.7 million b/d for those months seen from 2015 and 2019. The key risks are the pace of demand normalization in the US and Canada, which along with Europe account for about 44%, or 3.1 million b/d, of the gain, Platts Analytics noted.
Total refinery utilization likely climbed 1.2 percentage points to 82.8% of total capacity, analysts said. The uptick puts utilization around 6.2% behind the five-year average and leaves it roughly where it was ahead of the mid-February polar vortex that shuttered 4.4 million b/d of US Gulf Coast capacity.
USGC cracking margins for WTI MEH averaged $12.67/b for the week ended March 26, compared with $12.82/b the week earlier, Platts Analytics data showed. But year over year, Q1 2021 margins to date are averaging $10.27/b compared with $8.19/b for Q1 2020.
This strengthened refinery demand and an uptick in exports likely held back a seasonal build in US crude stocks, which are expected to have climbed 200,000 barrels to around 502.9 million barrels last week.
Outbound crude volumes average 2.79 million b/d last week, according to data from cFlow, Platts trade flow software, up from an EIA-reported 2.48 million b/d the week prior. Despite the overall increase, European-bound volumes fell to 220,000 b/d, down from 720,000 b/d the week prior and the lowest in at least five weeks.
The Brent-WTI spread was testing one-month highs last week at around $3.60/b as the closure of the Suez Canal tightened outlooks for European crude supply.
But the spread began to narrow on March 29 as vessel traffic resumed through the critical waterway.