Extract from crude oil:
In the first week of post-Harvey EIA data, crude stocks rose by 4.6 mb w/w—the first build in 10 weeks—to 462 mb (PADD 3 +1.7 mb, including +0.8 mb at Cushing). The build was driven by lower runs, which fell by 3.3 mb/d w/w (slightly higher than our modelled 2.9 mb/d estimated outage) to 14.5 mb/d, while exports plummeted to 0.15 mb/d. Lower production (-0.75 mb/d w/w to 8.8 mb/d) and lower imports were unable to offset this, despite imports dropping by 0.8 mb/d w/w to 7.1 mb/d (with PADD 3 arrivals down by 1 mb/d w/w to 1.5 mb/d, the lowest on record). Preliminary import data suggest lower arrivals from Canada (-0.21 mb/d w/w), Iraq (-0.22 mb/d w/w) and Mexico (-0.17 mb/d w/w), with some Mexican exports also cancelled due to Harvey. The closure of many important Texas waterways forced ships to float offshore and some short-haul LatAm shipments to be cancelled. With these ports now re-opening as of earlier this week, imports are likely to ratchet higher as plants that were forced to reduce rates or close due to lack of crude supply feast on imported barrels. Indeed, Marketlink flows have ramped to over 0.4 mb/d as of today, with the pipeline likely flowing into Bayou Bridge to supply Lake Charles refineries (as Port Arthur plants remain offline and Ho-Ho is not due back until this Saturday) and into TransCanada’s Houston Tank Terminal to supply Houston-area refineries which are in the process of ramping-up post-Harvey. This may pressure Canadian heavy values on the Gulf Coast as well as light sweet values at MEH.
Extract from oil products:
US gasoline stocks fell by 3.2 mb w/w to 226.7 mb, led by strong draws in PADDs 1 and 2. A combination of lower imports into the USEC—flows more than halved w/w to a six-month low of 0.35 mb/d—and disruptions to Colonial pipeline supplies pulled PADD 1 inventories down by 2.2 mb w/w, with much of this decline (-2.1 mb) concentrated in the Lower Atlantic. Despite significant production losses as Hurricane Harvey gradually forced the closure of refineries from Corpus Christi to Port Arthur over the week, stocks on the USGC fell by just 60 thousand barrels w/w as closures to product pipelines and export terminals disrupted takeaway capacity. With the largely domestically orientated refineries in Port Arthur appearing to face the lengthiest downtime—Valero doesn’t expect its 0.34 mb/d Port Arthur refinery to be fully operational for another 10-14 days—further drawdowns in inland gasoline stocks are likely in the coming weeks as waterborne barrels continue to be diverted to Latin American importers.