Extract from crude oil:
Crude stocks plummeted by 10.8 mb to 445.0 mb, which was far more than the five-year draw of just 0.55 mb. The drop was a result of the disruptions caused by Hurricane Barry, which at its peak led to the shutting-in of 1.4 mb/d of Gulf of Mexico output. BP’s 0.1 mb/d Atlantis field will only resume production by end-July as the company has decided to carry out planned works following the storm. The outages have pushed Mars to record premiums versus LLS.
Despite these draws and Cushing stocks falling by 0.43 mb, nearby WTI timespreads have weakened recently, driven by WTI-Midland differentials that fell below Basin pipeline tariffs and widened to triple-digit discounts relative to WTI-Cushing as unplanned refinery outages rose. The weakness may now continue until the September contract is off the board in late August. Midland balances could have coped with refinery works (i.e. Big Spring, El Paso) this fall and pipeline maintenance on West Texas Gulf and Mid-Valley through late summer. But it was the additional work announced at the 0.15 mb/d P66 Borger refinery—alongside an unplanned outage at the same refinery last week and an FCC issue at the 0.2 mb/d P66 Ponca refinery—that pushed differentials over the edge. Works at Borger initially appeared light, involving just the coker and the cat cracker, but now multiple downstream units are set to go down for work. In addition, at least one CDU will be running at lower rates between 15 September and 30 October, leading to at least 4 mb of Permian crude builds during that time as Borger reduces intake on the 0.1 mb/d WA Line from Odessa and the 28 thousand b/d Line 80 line from Gaines.
Extract from oil products:
US gasoline inventories fell by 0.2 mb w/w to 232.5 mb despite imports of nearly 0.99 mb/d as US Gulf Coast refinery capacity utilisation fell w/w by 4.3 ppts to 91.5% because of Hurricane Barry. PADD 1 gasoline inventories rose by 0.4 mb w/w despite imports falling w/w by 19 thousand b/d to 0.71 mb/d. USEC gasoline inventories were 4.2 mb below the five-year average last week and with the 0.35 mb/d Philadelphia Energy Solutions refinery seeking bankruptcy protection and moving to put its operations into cold shutdown during the bankruptcy process regional gasoline imports will need to remain elevated in order to meet demand (see E-mail alert: New PES bankruptcy does not suggest a significant extension of runs at the refinery, 22 July 2019).