Extract from crude oil:
While WTI timespreads have come under pressure due to surging Cushing stocks, US Gulf Coast grades have perked up in recent days, albeit partly due to offset the weakness in WTI. Mars, for instance, has moved to a premium to WTI in recent days due to upcoming upstream maintenance and solid refinery demand. January Gulf of Mexico (GoM) production, however, surprised to the upside, growing by 79 thousand b/d m/m according to the EIA. We had expected production to be flat given company commentary in Q1 18 that suggested many operators were forced to scale back production given upstream constraints at Shell’s Enchilada platform. While well-level data for the Gulf of Mexico (GoM) is broadly complete for January, many wells that eventually rely on Enchilada to reach market have not reported production data to the BOEM since November 2017. This makes it more difficult to assess whether the unexpected m/m pop in production was attributable to higher throughput at Enchilada, or growth from other production in the Gulf of Mexico. Using pipeline data for offshore Louisiana indicates that deliveries on the Ship Shoal system in to St. James, which receives Bonito Sour from Enchilada, were just 46 thousand b/d in January, compared to around 0.1 mb/d of flows prior to the platform outage. Looking at production from other GoM platforms for January suggests the m/m pop was driven by output at Constitution rising by 30 thousand b/d and at Tahiti by 26 thousand b/d on a low December base for these two platforms. We understand Enchilada remains offline today, likely resulting in still low production from fields linked to the platform.
Extract from oil products:
US gasoline stocks fell for a fifth straight week, down by 1.1 mb w/w to 238.5 mb though, USEC stocks rose by 1.1 mb w/w. The rise in PADD 1 stocks comes as imports into the USEC recovered, with arrivals hitting an eight-week high of 0.64 mb/d. PADD 1 stocks remain some 8.5 mb lower y/y and PADD 3 inventories declined by 1.0 mb w/w despite regional runs hitting their highest since early January at 9.12 mb/d and imports staying above 0.1 mb/d for the second straight week. We expect imports to remain elevated in the coming weeks due to falling RINs prices, though the modest contango in RBOB may encourage European traders with stored material to hold off on shipping some summer-grade material to the US immediately. Healthy export volumes—averaging 0.97 mb/d last week—should help limit overall US stock growth, however.