US crude stocks rose 1 million barrels last week, just over half of what analysts were expecting, as a drop in refinery run rates was partly offset by a decrease in US imports, according to data released Thursday by the US Energy Information Administration.
At a total of 362.3 million barrels for the reporting week that ended February 14, US crude stocks were 3.58% above the EIA's five-year average, however, stocks were about 14.1 million barrels below year-ago levels.
Analysts polled by Platts on Tuesday were anticipating a 1.9 million-barrel build in crude stocks and a 1 percentage point drop in utilization rates.
EIA data show that refiners' utilization rates dropped 0.3 percentage points to 86.8% of capacity last week.
Several US refineries experienced unplanned outages last week, including a gasoline unit at Tesoro's 166,000 b/d Golden Eagle refinery in Martinez, California.
Chevron shut several units at its 243,000 b/d refinery in Richmond, California, while Phillips 66 idled a fluid catalytic cracker at its Ponca City, Oklahoma, refinery. Philadelphia Energy Solutions shut a crude unit at its 330,000 b/d Philadelphia refinery February 7 for planned maintenance.
The outages were partially offset by the return of producing units at Shell's 145,000 b/d Puget Sound refinery in Washington and Delek's 70,000 b/d El Dorado, Arkansas, refinery.
Data from Macquarie earlier this week showed nearly 3 million b/d of operable US Gulf Coast refinery capacity is, or will be, offline across the first quarter of 2014 -- nearly a third of total Gulf Coast operable capacity.
EIA data for last week showed that Gulf Coast refiners were operating at 87.4% of capacity, compared with 88% in the previous week.
In that region, crude stocks rose 2.5 million barrels last week to 176.1 million barrels, while imports to the Gulf Coast dropped 330,000 b/d to 3.58 million b/d.
Crude stocks at the NYMEX delivery hub at Cushing, Oklahoma, fell 1.7 million barrels to 35.9 million barrels last week, marking the third consecutive week of declines at the hub and putting stocks there at a 3.44% deficit to the five-year average.
In the Midwest, crude stocks fell 2.6 million barrels to 102.8 million barrels last week.
Torbjorn Kjus, an oil market analyst at DNB Bank, called the EIA report "fairly neutral," but noted that one bullish element was the Cushing draw.
"But as refinery maintenance starts to kick in, the PADD 2 throughput should drop 300,000 b/d (more than 2 million barrels per week), preventing further stock draws in Cushing," Kjus said in a note.
Imports of crude to the US last week fell 508,000 b/d to 7.421 million b/d, led by a 398,000 b/d decline in imports from Venezuela to 636,000 b/d.
There was a 522,000 b/d increase in imports from Saudi Arabia last week, but import declines of 390,000 b/d and 394,000 b/d from Iraq and Kuwait, respectively, offset those gains.
US DISTILLATE IMPORTS SURGE
Imports of distillates rose 60,000 b/d to 329,000 b/d last week, 13% above the EIA five-year average of 291,000 b/d.
Total distillate stocks declined 300,000 barrels to 112.7 million barrels, keeping stocks at a more than 22% deficit to the five-year average.
Analysts were anticipating a 2 million-barrel decline in distillate inventories.
Distillate stocks have fallen by more than 12.2 million barrels over the last six weeks as cold weather across the US continues to weigh on stockpiles.
US Atlantic Coast combined low and ultra-low sulfur diesel stocks of 18.34 million barrels in the week that ended February 14 are nearly 31% below the five-year average.
Stocks were 21.6 million barrels around this time a year ago.
"The US crude oil market is currently supported by the cold weather which negatively affects oil production growth, particularly in North Dakota, and at the same time positively affects demand for distillates," Kjus said.
"We should, however, within the coming four-six weeks see a shift in focus towards the gasoline market and the temperature effect will wane out," he added.
US gasoline stocks rose 300,000 barrels to 233.4 million barrels last week, counter to expectations of a 1.3 million-barrel draw.
Implied demand for finished gasoline fell 295,000 b/d to 8.03 million b/d.
Kjus noted that gasoline stocks normally start to drawdown from this point in the season until the middle of May.
"We did not get the normal gasoline stock draw this week and any anomaly versus this normal pattern of gasoline stock draws poses a [bearish] threat to US oil prices in the coming two to three months," Kjus said.
"We think there is large risk for a short term downward correction in WTI prices, noting that speculative positions in WTI [are at a] record high right now and we will soon approach peak refinery maintenance season in the middle of March," Kjus said.
NYMEX March crude was fairly flat after the release of EIA data, with the contract down 9 cents at $103.22/barrel at 11:08 am EST (1608 GMT). By 12:20 pm EST (1720 GMT), the contract was about 21 cents lower at $103.10/b.
NYMEX March ULSD was up 1.22 cents at $3.1590/gal and March RBOB was down 89 points at $2.8158/gal.
