Extract from crude oil:
Fog-related delays continue to influence the US weekly data, and while last week saw a large counter-seasonal draw as exports were prioritised over imports, this week’s data reversed that trend with a 7.1 mb build versus the usual weekly build of 5.2 mb. The builds in this week’s data were concentrated in the logistically isolated PADD 5 (+3.7 mb), with PADD 3 builds at just 0.9 mb. Even so, total petroleum stocks were dragged down by lower products inventories despite hefty crude builds. Importantly, averaged over the two weeks, crude stocks have drawn by 0.8 mb, compared to the five-year average build of 4.2 mb, with imports averaging 6.5 mb/d and exports at 3.1 mb/d. Based on our gas scrape data which informs our short-term oil production model, we believe production is underperforming, with freeze-offs in the Permian and STACK/SCOOP this week weighing on output, following freeze-offs in the Bakken in February.
Extract from oil products:
US gasoline inventories fell by 4.2 mb w/w to 250.7 mb for the week ending 1 March. PADD 1 reported a significant draw of 3.6 mb w/w to finish the week at 65 mb (+3.1 mb y/y), as low refinery runs offset a 0.1 mb/d w/w rise in imports to 0.54 mb/d. However, local output should improve from here. Colonial pipeline linespace, which has been trading in negative territory since 16 January, continues to decline in value and has fallen for four consecutive sessions. The lack of demand to move gasoline from the USGC to USEC is largely due to 0.23 mb/d of offline FCC capacity returning to service, with the return of Bayway and Girard Point. PADD 2 inventories fell by 0.1 mb w/w to 58.4 on refinery outages and the transition to lower RVP grades pushed regional gasoline prices up to a three-month high. Despite the recent strength, and inventories falling by 2.5 mb y/y, potential flows of gasoline have been limited to the Buckeye Complex, while the arbitrage along the Explorer pipeline remains shut.