By August 23, 2016 Read More →

EIA data likely to show gasoline stocks fell 1.6 million/b – Global Platts

ExxonMobil's Beaumont, TX refinery.

ExxonMobil’s Beaumont, TX refinery.

US Atlantic coast gasoline stocks have fallen last three reporting periods, helping reduce sizable surplus

Severe flooding on the U.S. Gulf Coast took a toll on the region’s refineries last week, causing disruptions at major facilities that likely contributed to a draw in U.S. gasoline stocks, according to  S&P Global Platts analysis.

With units down at refineries in Texas and Louisiana, analysts surveyed Monday by S&P Global Platts are looking for gasoline stocks to drop 1.6 million barrels.

Distillate stocks are expected to rise 350,000 barrels, a slight build that may have been even larger without the Gulf Coast outages.

For the same reporting period, distillate stocks have risen by 1 million barrels on average from 2011-15, according to U.S. Energy Information Administration (EIA) data.

“Refinery problems have the opposite effect on crude stocks, pushing stocks higher as the utilization rate declines,” said S&P Global Platts Oil Futures Editor Geoffrey Craig.

“Indeed, analysts are looking for crude inventories to rise 200,000 barrels last week, and for refinery utilization to decline 0.6 percentage points to 92.9% of capacity.”

One factor offsetting the impact of a refinery utilization decline could be fewer crude imports. Imports have decreased the last two reporting periods, averaging 8.193 million barrels per day (b/d) the week that ended August 12.

“The outlook for a crude build combined with a gasoline draw represents the recent norm as weekly inventory reports have tended to present a mixed picture of late,” said Craig.

Only three of the last ten reporting periods have featured draws in both crude and gasoline stocks, according to EIA.

“The raft of refinery disruptions to emerge last week likely extended this pattern. Facilities impacted by the storms included ExxonMobil’s refineries in Baton Rouge, Louisiana, and Baytown, Texas, as well as LyondellBasell Industries’ refinery in Houston,” said Craig.

The refinery outages helped tighten the gasoline market, which was already seeing strong demand ahead of the busy U.S. Labor Day holiday that usually means additional driving.

For the week that ended August 12, implied* gasoline demand was 9.762 million b/d, which was 53,000 b/d below the highest weekly average ever tallied in mid-June, according to EIA data.

The spotlight will also be on the U.S. Atlantic Coast (USAC) — home to the New York Harbor-delivered New York Mercantile Exchange (NYMEX) reformulated blend stock for oxygenate blending (RBOB) futures contract — to see if the region’s streak of draws can continue.

USAC gasoline stocks have fallen the last three reporting periods, helping reduce the sizable surplus that accumulated in the region and lifting the RBOB crack spread.

The RBOB crack spread against NYMEX crude rose about $15/b Friday, up $2/b compared with the start of the week.

Fewer gasoline imports would help the USAC continue to reduce its inventories, which despite recent draws stand 13.8 million barrels above the five-year average for the same time of year.

Meanwhile, exports of distillates from the Gulf Coast to Europe look to remain heavy, with around 1.97 million metric tons (mt) loaded and set for discharge so far in August, according to an S&P Global Platts analysis.

That compares with a total of 1.6 million mt crossing the Atlantic on the same route in July and a year-to-date high of 2.03 million mt in April.

Historically, more exports puts downward pressure on inventories. Gulf Coast stocks of low- and ultra-low sulfur diesel were nearly 40 million barrels the week ending August 12, a 10% surplus to the five-year average.

* Implied demand is the amount of product that moves through the U.S. distribution system, not actual end consumption.

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