In a rare reversal of the trend seen throughout this year, crude inventories reduced their surplus to the five-year average, while product stocks (excluding other oils) increased, although they still remain 37.4 mb below the seasonal average. Crude inventories drew by 0.3 mb, taking the difference to the five-year average lower by 2.9 mb to 41.1 mb. Refinery runs rose back above 15 mb/d for the first time since late August, as refineries continued to return from maintenance, higher w/w by 0.29 mb/d, although imports rose above 8 mb/d for the first time in two weeks. Cushing inventories built for the second week running, with this week's build of 0.7 mb taking inventory levels just 1.9 mb below the record highs in June this year. Indeed, as we had noted, Cushing builds have not only been a function of the conversion at BP's Whiting refinery but also of sharply lower Bakken and Syncrude prices relative to WTI since early October, which have incentivised sending crude to Cushing once again, while inventories in the Midwest outside Cushing have started to fall. We expect Cushing balances to remain weak in the near term, despite increasing volumes of North Dakotan production being railed to other parts of the US, until the start-up of Seaway's expanded pipeline in February next year.
Among product stocks, gasoline registered a higher-than-seasonal build of 3.9 mb. The builds were spread all over the US, with the largest increase in the East Coast, as the 0.07 mb/d Port Reading returned from being offline due to Hurricane Sandy and imports remained elevated. With the 0.24 mb/d Bayway refinery on its way back online as well, gasoline inventories are likely to continue building in the region. Meanwhile, distillate stocks drew counter seasonally, lower w/w by 0.8 mb and are now below the five-year average by 32.3 mb. The bulk of the draws centered in the Gulf Coast, where stocks are at their lowest levels since May, with a seasonal pick-up in demand and continuing high exports of above 1 mb/d likely to keep pressurising inventories. Nonetheless, the second attempt to start-up the 0.325 mb/d Motiva refinery in the US Gulf Coast in the coming weeks is likely to provide a boost to distillate supplies to the US, with the refinery set up to maximise distillate output.
Total US oil demand eased just below 19 mb/d last week, following two weeks of above 19 mb/d readings, led by softer readings on gasoline (8.427 mb/d) and distillates (3.837 mb/d). Nonetheless, in the month-to-date, US oil demand is averaging 19.211 mb/d, higher y/y by 131 thousand b/d (0.7%), with gasoline up a strong 187 thousand b/d (2.2%). Distillate demand, which had started to show some life, fell back once again, with November-to-date demand now lower y/y by 2%. With temperatures suggesting a cold winter, heating oil demand is likely to receive a boost in the coming months, despite significant switching to natural gas in home heating in the East Coast.