The latest EIA data showed US crude stocks drawing (by 1.8 mb) for only the second time in four months. The draw was counter-seasonal and reduced the overhang to the five-year average to 21.9 mb. The decline was underpinned by crude imports falling w/w by 0.6 mb/d to 6.89 mb/d. Seaborne imports from Saudi Arabia, Colombia, Kuwait and Nigeria saw the largest decline, with reduced intake from the first three potentially linked to the heavy crude SPR release amounting to 0.7 mb last week. Unsurprisingly, inventories in the Gulf Coast led the decline (down by 1.9 mb), as imports eased to 2.95 mb/d. This was only the third time in 22 years that imports have fallen below 3 mb/d, while USGC runs picked up to 8.43 mb/d. However, this week's draw is unlikely to boost USGC crude grades significantly as inventories remain at near record highs of 213 mb. Coupled with the commencement of the recently announced refinery turnarounds through this month and next, USGC crude stocks are likely to build again, ending Q2 14 above 230 mb. This may weigh on Cushing balances in May, if flows on Marketlink and Seaway start to slow down. However, for now, Cushing stocks are drawing fast, with the latest data showing a 1.4 mb draw, the fastest rate in nine weeks. The flows on Marketlink have ramped up, catching up with the nominations following some outages last month. Moreover, while restrictions on the Keystone Pipeline into Cushing were lifted in late April, they are back in May and June as TransCanada's tank tie-in works at Cushing continue. So far in May, flows on Marketlink have averaged around 0.41 mb/d, Seaway just above 0.3 mb/d and Keystone into Cushing at just above 0.2 mb/d. Total outgoings on Marketlink and Seaway are some 0.2 mb/d higher than what we estimated for this month, given the compression of spreads between the USGC and WTI, and may be heavy crude (Mars is in contango while LLS is still backwardated). Across April, Cushing draws averaged 3.2 mb, closer to our initial forecast of 4 mb draw than our revised 2 mb draw, due to the pipeline hiccups. May draws should be lower, despite the extremely bullish start, as some of the pipeline flows adjust, and we are maintaining our forecast of a 1.5 mb draw for now.
Total product stocks excluding other oils increased w/w by 2.1 mb. US gasoline stocks rose by 1.6 mb w/w as refineries in the Midwest and Gulf Coast regions returned from maintenance. US East Coast gasoline stocks rose by 0.3 mb to 54.5 mb, with badly depleted RBOB stocks rising by 0.6 mb to 15.9 mb. With tanker tracking suggesting that imports into PADD 1 may rise by more than 0.4 mb/d w/w to 1 mb/d for the week ending 9 May, the next EIA report is likely to show a substantial increase in PADD 1 gasoline stocks that will maintain the pressure on prompt RBOB pricing. US distillate fuel inventories declined by 0.4 mb w/w as falling stocks on the US East Coast offset rising inventories in PADDs 2 and 3 on higher refinery utilisation.