Extract from crude oil:
Cushing stocks rose by 35 thousand barrels w/w to 66.3 mb, taking the cumulative stockdraw across May to 0.2 mb, versus our expectations of a 2.1 mb draw across the month. The lacklustre pace of draws versus our forecast has been driven by unexpectedly low outflows on BP1, to BP’s Whiting refinery. Indeed, we had expected BP1 flows to drop m/m in May, however, the drop has been far larger than we had expected. Given firm Bakken crude values for May, alongside 0.2 mb/d of synthetic crude production offline, we had expected Whiting to rely more heavily on Cushing supplies especially with downstream desulphurisation units offline for maintenance (limiting the plant’s ability to shift to a heavier slate of Canadian crude). However, the lower BP1 outflow was partially offset by lower than expected inflows on Basin this month. Again, given trade month average differentials for WTI-Midland alongside our Permian production forecast suggesting stellar production growth in the basin, we had expected Basin to remain full in order to evacuate the region. However, it appears instead that the wide WTI-Midland/WTI-MEH spread is incentivising shippers to drop off Basin crude at Wichita Falls and Colorado City (for delivery to the USGC), instead of moving out of Wichita Falls to Cushing or Wynnewood. As a result, we have lowered our May Cushing stockchange forecast by 0.7 mb, but expect stocks to draw by 2.3 mb in June and 0.5 mb in July.
Extract from oil products:
US gasoline inventories drew for the second consecutive week, falling by 0.4 mb to 241 mb. Despite the draw, the y/y inventory overhang rose to 2.6 mb. The overall draw was led by a 1.6 mb decline in PADD 2 and a 0.6 mb draw in PADD 5 as power cuts disrupted operations at Valero’s Benicia refinery through much of the last week. PADD 3 stocks rose w/w by 1.1 mb as refinery runs surged, whilst PADD 1 inventories pushed higher by 0.4 mb. This leaves East Coast stocks higher y/y by 4.1 mb but lower imports in the coming weeks should help to ease the current overhang. Indeed, PADD 1 gasoline imports pulled back by 0.2 mb/d w/w to 0.6 mb/d last week and five products tankers from Europe, initially signalling New York, have since diverted to Canada and the Caribbean.