November 27, 2021

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US Crude stockpiles have risen as exports have slowed and refinery demand has increased

US Crude stockpile have risen as exports have slowed and refinery demand has increased

As per the US Energy Information Administration data released Nov. 24, crude oil stockpiles increased in the week ending Nov. 19 as a steep drop in exports offset rising refinery demand.

The EIA reported that total commercial crude stockpiles increased by 1.02 million barrels to 434.02 million barrels in the week ending Nov. 19, putting them 7.2 percent behind the five-year average for this time of year.

The increase was focused on the West Coast of the United States, where stockpiles rose 3.05 million barrels to 50.6 million barrels, the highest level since the week ended March 5.

Midwest inventories rose 1.31 million barrels to a six-week high of 110.8 million barrels. At the NYMEX delivery location of Cushing, Oklahoma, this construction featured a 790,000-barrel increase. Cushing stocks have now increased for two weeks in a row, reaching a four-week high of 27.39 million barrels; nevertheless, stocks remain significantly below typical for the storage hub and are still more than 47% below the five-year average.

New York Mercantile Exchange (NYMEX) front-month January WTI fell 11 cents to $78.39 per barrel, while ICE January Brent fell 6 cents to $82.25 per barrel.

The overall crude accumulation was aided by a steep drop in weekly exports. Outbound crude volumes dropped by 1.02 million barrels per day to 2.61 million barrels per day, a six-week low. Meanwhile, total crude imports increased by 4% to 6.44 million b/d.

Considering this, oil stocks in the US Gulf Coast fell 2.62 million barrels to 239.96 million barrels, as area refinery crude needs hit a 12-week high of 8.47 million barrels daily.

Refinery demand increased 1.6 percent week over week to 15.64 million b/d, with overall utilization averaging 88.6 percent.

The annual comeback of refineries from turnaround has resulted in net crude inputs rising for three weeks in a row, although at a slower pace than in prior years, causing runs to fall further below the five-year average. Refinery net crude inputs were about 4% below usual last week, the largest shortfall since early September, when several USGC refineries were still shut down due to Hurricane Ida.

The delayed recovery of capacity from the shoulder season doldrums could be due to low refinery revenues. As per Platts Analytics, the US Gulf Coast WTI MEH cracking margin averaged $11.84/b in the week ending November 19, down from $12.37/b the week before.

EIA’s proxy for demand, total product supplied for all refined products, increased by 120,000 b/d to 21.75 million b/d, a five-week high and about 9% more than the five-year average for this time of year.

Due to high demand, product inventories are decreasing

Demand for all main refined products was up. The intake of gasoline and distillate climbed from around 1% per week to 9.33 million b/d and 4.39 million b/d, accordingly. Demand for distillates increased to its highest level since the week of Sept. 17 and was more than 8% higher than the five-year average. Similarly, implied gasoline demand was 3.4 percent higher than normal, marking the ninth consecutive week of higher demand.

Consumer demand for gasoline and distillates was strong, resulting in counter-seasonal demand for both products.

Total gasoline stockpiles declined 600,000 barrels to 211.39 million barrels, or 5.2 percent below normal, while total distillate stocks fell 1.97 million barrels to 121.72 million barrels or 5.2 percent below average.

Stocks of US Atlantic gasoline fell 20,000 barrels to 53.82 million barrels, the first drop in three weeks. The out-of-season pull left storage levels 9.2% below average, breaking a three-week trend of inventory normalization.

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