US crude stocks rise slightly, gasoline inventories down

US crude stocks
US crude stocks rose by 118,000 barrels last week.  Analysts had anticipated a drop of 2.6 million barrels in the week ending June 23.

US crude stocks up 118,000 barrels in week ending June 23

On Wednesday, the US Energy Information Administration released data showing US crude stocks had risen last week and gasoline inventories fell.

Crude inventories rose by 118,000 barrels in the week ending June 23.  Analysts had expected a decline of 2.6 million barrels on increased imports of 129,000 barrels per day (b/d) and falling refinery runs of 262,000 b/d.

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According to the EIA, gasoline stocks were down by 894,000 barrels, compared with expectations of a 583,000 barrel reduction.  Current gasoline inventories remain high and are about 7.5 per cent above the seasonal average for stocks over the past five years.

Reuters reports the high inventories have squeezed refining profits.  The current gasoline crack spread on the New York Mercantile Exchange, which is an indicator of refining margins, is at $16.53/barrel.  That is $3 lower than the five-year average of $20.56.

Heavy supply is hurting refiners even during the summer driving season.

“U.S. gasoline stocks remaining above its five-year average underscores demand concerns in the market,” Abhishek Kumar, senior energy analyst at Interfax Energy’s Global Gas Analytics told Reuters.

Over the past four months, gasoline demand is down 2.4 per cent against the same time last year, according to the EIA.

Despite the lower numbers, the American Automobile Association says it expects a record number of drivers to hit US roads and drive over 50 miles from home during the upcoming Fourth of July weekend.

The EIA data showed stocks at the Cushing, Oklahoma delivery hub for US crude futures fell by 297,000 barrels.

US crude production was also down last week, falling by 100,000 b/d to 9.25 million b/d.

According to Andrew Lipow, president of Lipow Oil Associates, that is “a significant decline given the increases in previous weeks and that is supporting crude futures today.” Lipow told Reuters that some of that production decline was likely due to Tropical Storm Cindy, which impacted some operations in the Gulf of Mexico last week.

The EIA reported refinery utilization rates fell 1.5 per cent to 92.5 per cent of operable capacity.  Distillate stocks, including diesel and heating oil also fell last week and are down by 223,000 barrels.  Analysts had anticipated an increase of 453,000 barrels.

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