US oil production increases 152,000 b/d, rig count and refinery utilization up – Platts

Canadian imports jumped 445,000 b/d to 3.302 million b/d (most Canadian imports enter US through Midwest)

US Gulf Coast refiners processed a record amount of crude oil last week, helping draw barrels from storage according to Energy Information Administration data released Wednesday, says S&P Global Platts.

Gulf Coast crude runs rose 101,000 b/d to 8.956 million b/d in the week ended August 12, EIA said. That eclipsed the previous all-time high set the week ended April 1.

The EIA data goes back to 1992.

USGC refinery utilization rose 0.4 percentage points to 94.7 per cent of capacity, which marked the highest rate this summer.

But utilization could be headed lower because several major Gulf Coast refineries have experienced problems amid severe flooding in the region.

The latest disruption occurred at the 502,500-b/d Baton Rouge, Louisiana, refinery, where ExxonMobil shut a crude distillation unit Wednesday.

Gulf Coast crude stocks fell 218,000 barrels to 272.124 million barrels last week. An increase in USGC imports of 300,000 b/d to 3.675 million b/d helped mitigate the size of the region’s crude draw.

Total US crude stocks decreased 2.508 million barrels last week to 521.093 million barrels, easily surpassing analysts’ expectations of a 200,000-barrel decline.

Crude oil stocks saw counter-seasonal builds the three previous weeks, which raised speculation that the period of increases usually seen after the Labor Day holiday had already arrived.

Last week’s EIA data showed that refinery demand remained strong with room to grow before the end of the summer.

Crude runs increased 268,000 b/d last week to 16.865 million b/d, which was 90,000 b/d above a year ago. Refinery utilization was up 1.3 percentage points to 93.5 per cent of capacity, compared with analysts’ expectations of a decline of 0.8 percentage points.

Fewer imports also contributed to last week’s drawdown in crude oil inventories. Imports dropped 211,000 b/d to 8.193 million b/d, which aligned more closely with recent levels. Imports have averaged 7.9 million b/d year to date.

By country of origin, imports fell from Nigeria and Ecuador by 211,000 b/d and 108,000 b/d, respectively, while Canadian imports jumped 445,000 b/d to 3.302 million b/d.

Most Canadian imports enter the United States through the Midwest, which saw an increase in refinery utilization of 1.8 percentage points to 95.2 per cent of capacity.

US PRODUCTION RISES

One factor mitigating the size of last week’s crude draw was US crude production, which EIA estimated grew by 152,000 b/d to 8.597 million b/d.

Alaskan production increased 52,000 b/d to 477,000 b/d, while output in the Lower 48 states was up 100,000 b/d to 8.12 million b/d.

It was the first weekly increase in Lower 48 production since early March, and comes on the heels of stepped-up drilling activity.

The number of rigs drilling for oil in US has increased seven straight weeks to 396, up from a trough of 316 rigs in late May, according to Baker Hughes.

The EIA was likely understating actual production of late, and last week’s figures represented an initial upward revision, according to Anthony Starkey, energy analysis manager at Platts Analytics, the forecasting and analytics unit of S&P Global Platts.

“It would not be surprising to see production estimations continue to ramp higher in the weeks ahead,” he said.

GASOLINE STOCKS DRAW

US gasoline stocks decreased 2.724 million barrels last week to 232.659 million barrels, compared with analysts’ expectations for a 1.8 million-barrel decline.

Moreover, expectations shifted late Tuesday when the American Petroleum Institute reported gasoline stocks built 2.2 million barrels last week.

Gasoline stocks have fallen the last three reporting periods by a total of 8.8 million barrels, which has helped narrow the gap between current inventories and historical norms.

Inventories stand 21 million barrels above the five-year average for the same time of year. That surplus was nearly 26 million barrels earlier this summer.

Implied* demand inched 7,000 b/d lower last week to 9.762 million b/d, but was still just 53,000 b/d below the highest weekly average recorded in mid-June, according to EIA data.

On the US Atlantic Coast, home to the New York Harbor-delivered New York Mercantile Exchange reformulated blend stock for oxygenate blending (RBOB) futures contract, gasoline stocks fell 790,000 barrels to 70.125 million b/d.

Even though the US Atlantic Coast gasoline stocks still equal a 24.5 per cent surplus to the five-year average for this time of year, the RBOB spread crack was rallying in the wake of the EIA data.

The RBOB crack spread against New York Mercantile Exchange crude oil futures was trading Wednesday afternoon at $14.33/b, up $1.63.

Distillate stocks increased 1.939 million barrels last week to 153.135 million barrels. The surplus to the five-year average rose to 13 per cent from 12.2 per cent. Analysts were looking for a decline of 500,000 barrels.

US Atlantic Coast stocks of low- and ultra-low sulfur diesel increased 1.053 million barrels to 56.268 million barrels.

Combined stocks on the Gulf Coast were up 625,000 barrels to 39.979 million barrels.

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