US gasoline inventory builds likely resumed in the week ended Dec. 25 as the Christmas holiday weighed on already-weak driving demand, an S&P Global Platts analysis showed Dec. 28.
Total US gasoline inventories are expected to have climbed 2.3 million barrels last week to around 240 million barrels, analysts surveyed by Platts said. The expected build would more than make up for a counter-seasonal 1.13 million-barrel draw reported by US Energy Information Administration during the week prior and leave stocks at the highest since the week ended Aug. 14.
Apple mobility data shows US driving activity in the week ended Dec. 25 was down nearly 3% from the week prior, snapping back-to-back weekly gains in driving demand.
Driving activity on the Dec. 25 Christmas Day holiday was the weakest since Easter Sunday on April 12, Apple data showed.
Distillate builds are also expected to have resumed last week, with inventories expected 1.3 million barrels higher at around 150.2 million barrels according to analysts.
Gasoline and distillate demand typically decline during the end-of-year holidays, falling to a seasonal nadir in early to mid-January, EIA data shows. This seasonally weak demand is likely being exacerbated by increasing restrictions on travel and trade due to a resurgent pandemic in many states. At least 20 states plus the District of Colombia currently have at least some restrictions on business activity, according to New York Times data.
A slower build
Notably, gasoline inventories have been building at a slower-than-normal pace in recent weeks, narrowing a supply overhang that had emerged earlier in December. Last week's expected build would leave stocks 3.1% above the five-year average of EIA data, in from 3.4% the week prior and the lowest since the week ended Oct. 23.
This trend could be the result of refinery efforts to reduce gasoline output in the face of weak demand and growing regional surpluses. US East Coast stocks of total gasoline hit a five-month high the week ended Dec.18, while US West Coast stockpiles were still nearly 6% above normal during the period, despite edging down to a four-week low.
Production of non-California gasoline plummeted 34.4% in the week ended Dec. 18 to 458,000 barrels, according to California Energy Commission data released Dec. 23, putting production nearly 54% behind year-ago levels.
Total refinery utilization is expected to climb 0.7 percentage point to 78.7% of total capacity in the week ended Dec. 25, analysts said, putting runs nearly 17% behind the five-year average.
The uptick was likely supported by strengthened margins. US Gulf Coast cracking margins for WTI MEH averaged at $7.28/b in the five days ended Dec. 24, S&P Global Platts Analytics data shows, up compared with a December-to-date average of $6.45/b.
Total commercial crude inventories are expected to have declined 3.8 million barrels to around 495.7 million barrels, analysts said. But despite likely drawing for a third straight week, inventories are expected to remain ample at nearly 11% above the five-year average.
