New York—US crude oil inventories moved sharply lower during the week ended Jan. 22 as exports surged and imports tested multimonth lows, US Energy Information Administration data showed Jan. 27.
US commercial crude inventories declined 9.91 million barrels during the week ended Jan. 22 to a 10-month low of 476.65 million barrels, according to EIA data. It was the largest one-week draw since the week ended July 24 and left inventories just 6% above the five-year average, the narrowest supply overhang since early April.All regions outside of the Rockies saw crude inventory draws last week, but the bulk of the decline was concentrated on the US Gulf Coast, where stocks fell 6.43 million barrels to 256.62 million barrels.
Midwest inventories moved 2.68 million-barrels lower on the week to 136.98 million barrels, driven largely by a 2.28 million-barrel decline at the NYMEX delivery point of Cushing, Oklahoma. Stocks there fell to 50.292 million barrels, the lowest since the week ended July 17.
Front-month NYMEX March WTI settled up 24 cents on Jan. 27 to $52.85/b.
The crude draw came as exports surged 1.1 million b/d to 3.36 million b/d. The rise took exports to their highest average weekly level since the week ended on Jan. 1, and kept the four-week moving-average above 3 million b/d.
The uptick comes despite difficult arbitrage economics. The arbitrage for WTI MEH crude into Rotterdam against local Forties crude fell to a minus 34 cents/b incentive on Jan. 26 and has averaged just a 4 cents/b incentive through the first 26 days on January, according to the S&P Global Platts Crude Arbflow calculator. Through December, by comparison, the arbitrage incentive averaged 57 cents/b.
Adding further pressure to inventories, crude imports sank 980,000 b/d to a 12-week low of 5.06 million b/d. USGC imports slid 39% on the week and were the lowest since late August at 880,000 b/d, while Midwest imports were down around 18% from the week prior at 2.41 million b/d.
Resilient refinery demand likely also contributed to the crude draw. Total net crude inputs edged down just 40,000 b/d to 14.72 million b/d as the nationwide utilization rate fell to 81.7% of total capacity, a 0.8-percentage-point decline.
Refinery demand typically sees much larger declines in late January, and operators begin to idle capacity for shoulder season maintenance. EIA data shows a typical decline of net crude inputs of around 600,000 b/d over this period, and the relatively weak pullback seen last week pushed net inputs to just 8% behind the five-year average, the weakest deficit since the week ended March 20.
Notably, USGC net inputs were the strongest since late March after climbing 110,000 b/d to 8.11 million b/d as margins continued to edge higher. USGC WTI MEH cracking margins inched up 4 cents to $8.43/b, while USGC coking margins for WCS ex-Nederland gained 31 cents to average $8.32/b.
Gasoline stocks climb as demand slowsTotal gasoline inventories climbed 2.47 million barrels to 247.69 million barrels as implied demand slipped 3.4% to 7.83 million b/d. The counter-seasonal decline left demand nearly 12% behind the five-year average, in line with levels seen earlier this month.
Apple Mobility data shows US driving activity was higher for a third straight week last week, climbing nearly 2% from the week prior and up nearly 3% from a late-December nadir. This discrepancy suggests a possible disconnect between actual end-user demand and the EIA figures, which are a proxy based on product disappearing from primary sources.
Front-month NYMEX February RBOB settled down 36 points at $1.5771/gal on Jan. 27, while February ULSD finished up 1.05 cents at $1.6089/gal.
Gasoline inventories climbed in all regions during the week ended Jan. 22, but stocks lost ground compared with the five-year average on the US Atlantic Coast and Midwest amid weaker-than-normal builds. USAC inventories moved to around 1.9% above normal, in from 3.4% the week prior, and Midwest stocks fell 7.7% behind average, up from a deficit of 6.9% last week.
Total distillate stocks declined 820,000 barrels to 162.85 million barrels, widening the surplus to the five-year average to 8%.
