Extract from crude oil:
US crude stocks built again last week, this time by 2.4 mb to 419.5 mb driven by a 0.2 mb/d w/w reduction in runs to 16.5 mb/d, compared to the five-year average draw of 2 mb. However, a dip in imports to 6.4 mb/d drove USGC stocks lower by 3.4 mb. Ongoing refinery works will result in further builds in the coming weeks, so we peg October builds at 11.2 mb.
While the largest market impact from the attacks on Saudi Arabia’s 7 mb/d Abqaiq facility and the 1.2 mb/d Khurais field relates to Asia and Europe (see Perspectives: Abqaiq and eat it too, 23 September 2019), the US is still dependent on the Kingdom for medium crude imports. June EIA statistics peg US imports from Saudi Arabia at 0.56 mb/d, but we expect that volume to almost halve in October as Saudi Arabia had reduced nominations to the west for October loadings in keeping with OPEC+ commitments. Based on monthly EIA data, since January, Saudi shipments have already been eliminated to refineries at Garyville and Baytown in the USGC, and Anacortes, Carson and Benicia on the USWC. Between them, Motiva Port Arthur in the USGC and PBF Paulsboro on the USEC still import around 0.25 mb/d of Arab Medium (29–32 API), and Marathon Galveston Bay continues to import 35 thousand b/d of Arab Heavy (< 29 API). The most immediate impact to the US from the Saudi attacks relates to the 0.22 mb/d of Arab Light (32–36 API) and Extra Light (36–40 API) imported into the USWC, mostly to Chevron’s Richmond and El Segundo refineries. Both will now turn to medium grades from Brazil, Africa or eastern Russia as replacements, at a time when these grades are already well bid with IMO 2020 looming.
Extract from oil products:
US gasoline inventories rose by 0.5 mb w/w to 230.2 mb on a large 2 mb w/w build on the USEC and a 1.7 mb w/w gain in PADD 3 that offset declines in PADDs 2 and 5. US gasoline inventories stood 8.1 mb higher than the five-year average but remain 5.5 mb lower y/y, largely due to lower stocks on the USEC. USEC gasoline inventories of 64.4 mb were 3 mb lower y/y. Gasoline imports into the USEC jumped by nearly 0.3 mb/d w/w to over 0.73 mb/d. We expect imports into the USEC to remain supported over the rest of 2019 as exporters look to move higher-sulphur gasoline blends into the US prior to the expiry of most of the inventory of sulphur credits at year-end. From 1 January, the availability of credits that would permit the import of gasoline with more than 10 ppm sulphur content will be severely limited, which is likely to reduce the number of blendstocks that can go into the gasoline pool.