New York—US crude oil inventories declined in the week ended Dec. 25 amid a sharp uptick in export volumes and rising refinery demand, US Energy Information Administration data showed Dec. 30.
Total crude oil inventories declined 6.06 million barrels to 493.47 million barrels last week, EIA data showed as exports surged nearly 17% on the week to a 3.63 million b/d - the highest since the week ended March 20.The draw marks a third consecutive week of falling crude stocks, but left inventories still ample at more than 10% above the five-year average.
Related: Oil rally extends amid larger-than-expected US crude draw
The bulk of the crude stock decline was realized on the US Gulf Coast, where inventories moved 7.29 million barrels lower to 264.86 million barrels. Outside of a 200,000-barrel dip in Atlantic Coast stocks, crude inventories were higher in all other regions. Stockpiles at the NYMEX delivery point of Cushing, Oklahoma, edged up 30,000 barrels to 58.41 million barrels, a four-week high.
Notably, the steep decline in USGC crude inventories may be indicative of end of year tax maneuvering rather than the result of a natural increase in demand.
Annual tax assessments of crude oil inventories are typically carried out on Dec. 31, according to EIA, creating incentives for companies to reduce their holdings in the final weeks of the year through fast tracking exports, increasing refinery runs, or else moving barrels into regions with a higher tax advantage, such as Cushing.
Total refinery net crude inputs climbed 270,000 b/d to 14.29 million b/d as the nationwide utilization rate edged up 1.4 percentage points to 79.4%.
This refinery 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.
However, refinery runs remain historically weak at nearly 16% behind the five-year average for this time of year.
Gasoline stockpiles were down 1.19 million barrels at 236.56 million barrels last week, extending a counter-seasonal draw for a second straight week. The decline puts stocks them at a five-week low and just 1.6% above the five-year average, marking the narrowest supply overhang since mid-October.
Total product supplied for gasoline, EIA's proxy for demand, averaged at 8.13 million b/d last week, up 1.3% from the week prior. The demand uptick is notable as gasoline consumption typically declines during the end of year holidays, hitting a seasonal nadir in 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.
Notably, 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.
Total distillate stocks climbed 3.1 million barrels to 152.03 million barrels, EIA said. The build pushed stocks to their highest since late October but left them just 7.6% above the five-year average, the narrowest supply overhang since the week ended April 24.
