Extract from crude oil:
Crude stocks plummeted by 8.5 mb, versus the five-year average draw of 3.9 mb, to an eight-month low 436.5 mb. Over the last seven weeks, US crude stocks have fallen by 49 mb versus the five-year average draw of 21 mb. The draws were led by PADD 3 (-3.4 mb) as runs rebounded to 8.9 mb/d, even though nationwide refinery runs fell back below 17 mb/d on lower throughput in both PADDs 1 and 2. Exports fell to 2.6 mb/d while imports were low at 6.7 mb/d, although PADD 3 imports rebounded to 1.8 mb/d. Cushing stocks fell by 1.5 mb, bringing the month-to-date draw to 3.5 mb, in line with our full-month draw forecast of 4 mb.
As we detailed last week in Data review: US Department of Energy, 24 July 2018, WTI-Midland differentials may struggle through September trading. The West Texas Gulf and Mid-Valley pipeline hydrotests are just ahead and partially aligned with Lima refinery works, alongside planned and unplanned maintenance at the Ponca, Borger, El Paso and Big Spring refineries. The August WTI-Midland trade month discount to WTI-Cushing averaged $0.87—below the walk-up tariffs for the Basin pipeline for WTI-Midland delivered against DSW and wide open for neat Midland barrels into Cushing. September WTI-Midland has begun the trade cycle weak, averaging -$1.26 per barrel under WTI-Cushing, and while the differential will be volatile, it may not be able to divert large volumes of barrels away from Basin by the time nominations are due in late August.
Extract from oil products:
US gasoline stocks fell by 1.8 mb w/w to 230.7 mb as stocks drew in all regions but the USGC. PADD 1 gasoline stocks declined by 0.8 mb w/w to 59.1 mb and stood 4.5 mb below the five-year average last week despite heavy imports of 0.94 mb/d. Indeed, RBOB blendstocks slipped by 0.4 mb w/w to 17.2 mb, lower y/y by 0.6 mb. RBOB blendstock inventories are not always a clear guide to future price direction, but with octane values in New York rising sharply and premium gasoline continuing to trade at a significant premium to conventional grades, it seems tightness in high-quality blendstocks is persisting. This situation could well become more acute towards the end of August, when European gasoline exporters traditionally wind down summer gasoline production and transatlantic exports.