Extract from crude oil:
US crude stocks rose again last week, by 5.5 mb to 461 mb, compared to the five-year average build of 2.4 mb. Stocks were higher y/y by 31 mb and extended the surplus to the five-year average to 2.3 mb. PADD 3 builds were relatively muted at 1.8 mb, although still nearly double the seasonal average (1 mb), as imports recovered to 7.2 mb, offsetting a 0.4 mb/d w/w pick-up in PADD 3 runs to nearly 9 mb/d. Crude stocks built across all PADDs except for the Midwest, dropping from 141.3 mb in mid-March to 135.2 mb last week, as Midwest refinery utilisation stayed elevated at around 92%, with runs above 3.8 mb/d for two consecutive weeks. Midwest stocks outside of Cushing fell from 94.5 mb in mid-March to 90.3 mb last week. This reduction in stocks may be only be temporary, however. The 0.41 mb/d BP Whiting refinery has reportedly begun 40 days of maintenance on the 75 thousand b/d Pipestill 11A. Across town at the 0.24 mb/d ExxonMobil Joliet refinery, the first plant-wide maintenance for four years is getting underway and will run for a staggered 60-day period. There will be 30 days of works on the plant’s lone CDU and the 95 thousand b/d FCC, while the alkylation unit and delayed coker will also be worked on. By May, the 0.16 mb/d BP/Husky Toledo refinery in Ohio will see around eight weeks of work, encompassing the small 40 thousand b/d crude unit, one of the plants’ cokers, an isomerisation unit, a reformer and other units. All in all, and depending on the ultimate downtime of each unit, Midwest utilisation could fall below 85% in the weeks ahead, with most of the reduced runs resulting in surplus Canadian crude that should continue to make its way into Cushing. Taken together with full Permian pipelines into the hub, evidenced with a WTI-Midland month-to-date trade-month average of around -$2.71 per barrel for May, it is likely that Midwest stocks move sideways for now. While this will have a limited impact on WTI structure, we believe WTI-Brent will continue to remain under pressure driven by a much stronger international market, especially after this week’s news on Iran.
Extract from oil products:
US gasoline inventories fell by 2.1 mb w/w to 225.8 mb, some 11 mb lower y/y and 5.1 mb below the five-year average. Stocks in PADD 5 fell by 0.2 mb w/w to 27.9 mb, falling 1.1 mb below the five-year average. Despite the slight w/w draw, the downtrend in Los Angeles CARBOB differentials has paused, although levels remain elevated, driven by a unit upset at Phillips 66’s 0.14 mb/d refinery in Los Angeles. However, CARBOB differentials in San Francisco continued to drift lower, currently trading around a 2 c/gal discount to Los Angeles. Stocks in PADD 1 increased by 0.9 mb w/w, to 2.4 mb below the five-year average, while PADD 3 stocks fell by 1.8 mb w/w, leaving inventories 1.6 mb above the five-year average. Gasoline line space has drifted up by 1.45 c/gal since hitting its one-year low on 3 April, as the arbitrage between the USGC and USEC gains remains open for conventional 87 octane and RBOB. USGC regular CBOB (A2) for 26 cycle remains slightly backwardated, as Colonial A2 differentials fell by more than 1.25 c/gal, keeping the arbitrage to ship CBOB along the Colonial pipeline closed. Pasadena Refining, a Petrobras subsidiary, reported an FCC unit malfunction on 19 April during a planned startup after completing maintenance on the unit, potentially contributing to the backwardated structure for A2 in the USGC. Additionally, reformate cash differentials in the USGC have been gaining strength due to tight supplies, although there are reports of multiple barges on offer. PADD 2 inventories fell by 1.3 mb w/w, leaving inventories 6 mb lower y/y. Gasoline prices in Chicago’s Buckeye Complex are currently holding premium values in excess of 11 c/gal compared to the USGC, although CBOB differentials have fallen by 7.25 c/gal since 1 April.