US crude oil inventory draws likely resumed during the week ended April 23 amid an expected uptick in refinery demand, an S&P Global Platts analysis showed April 26.
Total commercial crude oil stocks are expected 200,000 barrels lower at around 492.8 million barrels, analysts surveyed by Platts said. The draw would narrow the surplus to the five-year average of US Energy Information Administration data to 0.6%, marking the weakest supply overhang since early February.
The draw comes amid an analyst-expected 0.3 percentage point climb in refinery utilization to around 85.3% of total capacity, leaving utilization around 1% behind the five-year average and the lowest since the week ended Feb. 28, 2020.
While utilization remained steady, EIA reported an unexpected decline in refinery crude runs during the week ended April 16. But runs are expected to again turn higher last week, averaging around 14.99 million b/d, according to S&P Global Platts Analytics data. This would leave them around 5% behind the five-year average, the narrowest deficit since the week ended March 20, 2020.
Refinery margins were again lower last week, adding headwinds to further recovery in refinery demand.
On the US Gulf Coast, WTI MEH cracking margins averaged $12.51/b in the five days ended April 22, latest Platts Analytics data shows, down from $13.15/b averaged to-date in April. This decline was due in large part to weaker gasoline cracks. The USGC unleaded 87 crack versus WTI MEH averaged around $19.11/b last week, compared with $19.95/b to-date in April.
Gasoline inventories steady
Total US gasoline stocks are expected steady from the week prior at around 235 million barrels, analysts said.
Likely contributing to weaker gasoline cracks, Apple mobility data shows US driving activity remained rangebound last week, edging 0.4% higher but still below levels seen in early April. This stagnant demand has also contributed to weakness at the front end of the RBOB curve.
Front-month NYMEX RBOB settled April 26 at a 1.16 cent/gal discount to the second-month contract, opening the widest contango in that part of the curve since February, when seasonal specification changes typically contribute to wide prompt-month discounts. Contango in the front-end of the RBOB curve is not uncommon in April, though the general weakening trend that has been seen in recent weeks is atypical.
A surge in imports into New York Harbor, the delivery point of the NYMEX contract, has exacerbated this weakness in RBOB pricing.
EIA reported the four-week average of US Atlantic Coast gasoline imports reached 762,000 b/d, their highest level in 19 months in the week ended April 16. The previous high was reported in the week ended Sept. 6, 2019, when four-week average imports reached 800,000 b/d.
This influx in supply has put pressure on New York Harbor infrastructure as discharge delays rise by 50% to almost nine days in April, up from the average six last quarter, according to Kpler data. At least five vessels bound for New York were rerouted to alternative ports in the week ended April 16.
Total US distillate stocks, in contrast, are expected to have fallen 1.2 million barrels last week to around 141.2 million barrels, analysts said.
Notably, the continued slide in distillate stocks have supported rising refinery cracks even as whole barrel margins retreated.
The USGC ULSD crack versus WTI MEH averaged $13.58/b last week, up 27 cents compared with the April to-date average of $13.31/b, and USGC jet cracks versus WTI MEH rallied to $7.05/b, compared with $6.98/b to-date this month.
