The latest EIA data showed a 0.6 mb w/w draw in crude stocks, despite, for the second week running, imports climbing by 88 thousand b/d to 7.2 mb/d, domestic output rising to nearly 8.5 mb/d and refinery runs falling by another 0.15 mb/d to below 15.4 mb/d. Most of the anomaly remains in the USGC even after adjusting for lower inter-PADD flows into the USGC, where runs fell to just 7.6 mb/d, due to a plethora of outages; including a complete shutdown of the 0.2 mb/d CDU at Motiva's Port Arthur refinery and the 50 thousand b/d CDU at Marathon's Texas City refinery, the 75 thousand CDU at Valero's Port Arthur refinery operating at lower rates due to a gas plant leak and Garyville remaining offline. Nonetheless, USGC refinery runs should start to pick-up in the coming weeks especially with the return of the 0.2 mb/d Chalmette refinery from maintenance last week, together with the gradual restart of Garyville (following the installation of cooling towers) and the earlier than expected restart of the Motiva CDU. In fact, US runs overall should start to climb back above 16 mb/d in the coming weeks, especially as power outages that impacted runs at Citgo's Lemont and Marathon's Catlettsburg refineries in the Midwest last week are mostly resolved, although the latter's FCC continues to be troublesome. US Midwest refinery runs, however, still hit a record high of 3.7 mb/d last week, supported by higher runs elsewhere, in particular at BP's Whiting refinery, following the recent upgrade. Moreover, with tanker tracking data suggesting a steep drop off in crude imports into the US, particularly from Saudi Arabia to the USGC, large seasonal stock draws should commence in the coming weeks, with end-July USGC stocks likely to be around 181 mb.
Meanwhile, stocks at Cushing increased by nearly 0.3 mb, the first build in 10 weeks, as outbound flows on Marketlink and Seaway remained below 0.3 mb/d, while Keystone flows to Cushing increased to 0.24 mb/d. With a four-day maintenance on the Seaway pipeline likely to offset any reduction in Keystone-to-Cushing flows due to a damaged pumping station from the tornado this week, Cushing stocks are unlikely to draw till later in the month, weighing on WTI.
US gasoline inventories rose by 0.8 mb w/w to 214.3 mb, as a big drop in USGC stocks offset increases elsewhere. US East Coast gasoline stocks increased by 1.4 mb w/w to 62.2 mb, just 0.1 mb below year-ago levels, as imports rose by more than 0.2 mb/d w/w to 0.766 mb/d, and East Coast refiners ramped up runs to 93.7% of capacity. Gasoline flows from Europe are likely to be lower this month due to weakening US gasoline prices and lower European refinery runs. But, high USEC gasoline stock levels will cushion the impact of lower imports. As a result, gasoline cracks are likely to continue to struggle, barring deeper run cuts in Europe or a spike in demand from the Middle East. Distillate fuel stocks rose by 0.4 mb w/w to 119.4 mb.