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The Weekly Petroleum Status Report released by the Energy Information Administration this morning was unsupportive all around, showing smaller than expected declines in both crude and propane/propylene stock levels, a surprise and sizeable build in distillates, and a larger than expected rise in gasoline stocks for the week ended November 27. Following the report's release, however, crude futures were strengthening.
Commercial crude oil inventories, expected to fall by 2.03mb, instead dipped just 0.68mb lower as refinery runs fell and both imports and production picked up, even as export activity increased. Stocks typically fall through early January, as refining activity is typically rising - last week's decline was counter-seasonal. At 488.04mb, US crude oil inventories are 7.1% above their five-year average, above the weekly five-year range, and 9.2% stronger than last year at this time. Cushing, OK saw about half of last week's small draw, with stock levels slipping down to 59.58mb. This is still in the upper portion of the five-year range, 13.5% above the five-year average, and 36.0% above last year's relatively weak levels.
Refinery runs typically rise form early October through late December, but 2020 has been anything but typical. In any event, runs fell by 0.25mb/d to average 14.01mb/d last week, which is 2.79mb/d lower than the same week last year and still near the Hurricane Harvey lows. Exports, however, did pick up by 0.63mb/d to average 3.46mb/d last week - 0.32mb/d higher than last year. Offsetting some of this increase was a 0.17mb/d rise in imports, which averaged 5.40mb/d, and a 0.10mb/d rise in production. At 11.10mb/d, US oil production is 1.80mb/d lower than last year and 2.0mb/d lower than the high from this spring.
Distillate stocks saw a surprise but seasonal build last week. The average of analyst surveys had called for no change in inventories, but stocks instead grew by 3.24mb, with weaker implied demand and stronger imports. Implied demand dropped 0.39mb/d lower to average 3.79mb/d last week, which is 0.23mb/d higher than last year. Imports overshadowed this, climbing 0.43mb/d last week to average 0.61mb/d, which is 0.47mb/d higher than last year. Exports rose slightly, by 0.12mb/d to 0.95mb/d, but were still running 0.46mb/d lower than last year. Production is running 0.68mb/d lower than last year after a marginal dip last week, to 4.59mb/d. Taking some of the bearish punch out of today's data is that the East Coast - home to the New York Harbor delivery point for the NYMEX HO (ULSD) futures contract - saw a 0.06mb draw. Regional inventories are 10.5% above their five-year average, however, and 46.9% stronger than last year. Overall, US inventories are 7.2% above their five-year average and 22.1% stronger than last year. There is a strong cushion against basis spikes, and New York Harbor barge price differentials to NYMEX remain relatively tame as charted above.
There was a 3.49mb build in gasoline stocks last week, exceeding expectations at 2.19mb, as implied demand and exports fell, while imports picked up - even as production slowed. Production fell 0.27mb/d with the counter-seasonal drop in refining activity, averaging 8.58mb/d or 1.36mb/d lower than last year. On the other hand, imports picked up by 0.08mb/d to average 0.52mb/d and exports slowed by 0.07mb/d, averaging 0.69mb/d. Implied demand also helped towards the build, falling seasonally by 0.16mb/d. At 7.97mb/d, implied demand is over 1mb/d lower than last year at this time, amid the pandemic.
Data for propane continued the unsupportive trend in today's report, as the 0.84mb draw reported fell under the 1.42mb expectation. Implied demand fell by 0.16mb/d to an average of just 1.01mb/d - well below the 1.77mb/d seen during the same week last year. Meanwhile, however, exports picked up by 0.20mb/d to an average of 1.52mb/d - well above last year's 0.84mb/d. Production was little changed at 2.29mb/d, while imports slowed slightly to 0.12mb/d. Most of last week's draw occurred on the Gulf Coast, where inventory levels fell by 0.56mb to 51.22mb. Still, this is 5.1% higher than the five-year average. The Midwest regained a surplus over the five-year average, as inventories shed just 0.10mb last week, to 25.75mb. East Coast stocks fell by 0.28mb to 8.68mb but are still 20.8% higher than their weekly five-year average. US stocks overall are 7.6% higher than their five-year average and 6.1% stronger than last year.