Increased refinery activity and fewer imports contributed to a large 10.6 MMBbl decrease in crude stockpiles last week.
Last week’s draw of 10.6 MMBbls was the largest of the year, though the price response was minimal as concerns of oversupply continue to weigh on the market. Commercial crude storage now sits at 526 MMBbls, 18% or 80.9 MMBbls above last year’s storage level of 445 MMBbls for the corresponding week, and 16% or 75.6 MMBbls above the five-year average of 451 MMBbls.
In contrast to the U.S. storage withdrawal, Cushing inventories rose by 1.3 MMBbls. Cushing inventories have managed to stay near the five-year average.
The Gulf Coast (PADD 3) led the way last week, its stocks declining by 10.5 MMBbls.
Refinery crude runs, meanwhile, rose by 389 MBbl/d and refinery utilization rates rose by 1.6 percentage points to 79.5% of overall capacity, the data showed. Refinery runs have steadily increased since the worst of government-mandated shutdowns occurred in late-March. However, the pace of recovery has slowed over the last several weeks.
Gasoline inventories rose by 654 MBbls, in comparison to forecast calling for a 733 MBbl drop in inventories. Distillate inventories also rose by 503 MBbls, after expectations of a 267 MBbl drop. Motor gasoline stocks remain 17 MMBbls or 7% above last year’s levels of 230.7 MMBbls during the corresponding week, currently sitting at 247 MMBbls.
A drop in net imports was the main driver of such a large decrease in crude oil inventories. Exports increased by 218 MBbls, while imports decreased by 794 MBbls, to amount to a decrease in net imports of 1.012 MMBbls. 5146 MMBbls were imported last week, our second lowest import total in the last 5 years, 209 MBbls above our lowest level of 4.937 MMBbls reached during April. Net imports were 1.935 MMBbls for the week ending July 24.
This week’s EIA stat release was a mixed bag, providing indicators of both recovery and stagnation in demand. The increase in refinery runs is a good sign. Yet, the build in transportation fuels, diesel, and gasoline, show total demand is not high enough to keep depleting total petroleum stockpiles. With substantial increases in Coronavirus cases across the country, gasoline and diesel may not return to pre-Covid levels for a while.