US gasoline stocks tighten amid stronger demand, weak refinery runs

A steep decline in refinery utilization and rising demand contributed to a counter-seasonal draw in US gasoline inventories in the week ended Sept. 23, the US Energy Information Administration reported Sept. 28.

Nationwide gasoline stocks declined 2.42 million barrels over the period to a 10-month low 212.19 million barrels, the EIA said. The counter-seasonal draw put stocks 6.4% behind the five-year average of EIA data.

Total product supplied for gasoline, the EIA's proxy for demand, surged 6% to 8.83 million b/d, a six-week high though still around 3% behind the five-year average for this time of year.

Gasoline stocks declined across all regions, but the draw was concentrated on the US Atlantic Coast where inventories drew down 1.26 million barrels to 55.17 million barrels. The USAC draw put stocks 9% behind average for this time of year and snapped three consecutive weekly builds that had seen inventories steadily normalizing against the five-year average.

Total distillate stocks drew 2.89 million barrels lower to 114.36 million barrels, falling 19.4% behind normal for this time of year.

NYMEX front-month October RBOB settled 8.48 cents higher at $2.5779/gal and October ULSD climbed 18.95 cents to $3.4494/gal.

Seasonal turnarounds underway have increased US refinery downtime, exacerbated by unplanned downtime at plants particularly on the US West Coast and Midwest. Total refinery net crude inputs fell nearly 4% on the week and were the lowest since early May at 15.75 million b/d, while refinery utilization pulled back three percentage points to 90.6% of capacity.

A Sept. 20 fire at the BP-Husky refinery in 150,800 b/d Toledo, Ohio, which claimed two lives, also shut down the plant, while BP also appears to be struggling to get a gasoline-making fluid catalytic cracking unit back online at its massive 435,000 b/d Whiting, Indiana, refinery after an Aug. 24 fire took offline several units, including two crude units and reformer.

Meanwhile, Phillips 66 shut a reformer at its 139,000 b/d Wilmington, California, refinery in mid-September while flaring at Marathon's 363,000 b/d Carson, California, is ongoing, pushing the price of CARBOB to an average of $4.12/gal for the week ended Sept. 23, according to Platts assessments. For the week ended Sept. 16, CARBOB averaged $3.54/gal.

Notably, both crude demand and utilization remained relatively strong at 1.3% and 5.5% above the five-year average, respectively.

Crude stocks show surprise draw amid strong exports

Total commercial crude stocks declined 210,000 barrels to 430.56 million barrels, the EIA said. The counter-seasonal draw widened the deficit to the five-year average to 2.2%, out from 1.9% the week prior, and ended a normalizing trend that had persisted since early August.

NYMEX November WTI settled $3.65 higher at $82.15/b and ICE November Brent rallied $3.05 to $89.32/b.

An additional 4.58 million barrels was released from the nation's Strategic Petroleum Reserve, leaving stockpiles there at a fresh 38-year-low of 422.58 million barrels.

The draws come as crude exports surged 1.1 million b/d to 4.65 million b/d, a six-week high.