EIA Report: Key Storage Levels See Small Moves, Gasoline Demand Disappoints
03.02.2017 - NEWS

March 2, 2017 [OPIS] - Data released by EIA earlier this morning for the week ending Feb. 24 may have hinted that the deepest of the refinery maintenance season was over.


A solid jump in refinery utilization of 1.7% to 86% of capacity points to the possibility that the heaviest of the maintenance cycle could be in the rear-view mirror. However, the market may want to see the trend of utilization moving higher before deeming the heaviest of the maintenance being over. Each of the past two years saw utilization bottom in February, but in the previous three years, the bottom was not reached until March.

During the most recent week, refiners ran 15.886 million b/d of crude oil and other feedstocks, representing a 316,000-b/d increase from the week prior. The Midwest and Gulf Coast refineries accounted for the total national build as the East Coast saw nearly 100,000 b/d of runs while other regions were largely flat.

The increase in utilization showed up in the key gasoline and distillate categories as total gasoline output increased to 9.541 million b/d, a 305,000-b/d increase as gasoline production inches toward 10 million b/d. Another 300,000 b/d or so was added to the distillate production picture, with last week seeing output increase to 4.755 million b/d.

Although refinery output of the key products increased week over week, both distillate and gasoline saw minor draws from inventories last week. Gasoline inventories in the U.S. pulled back by 500,000 bbl last week, and that leaves inventories still at a surplus to last year of just under 1 million bbl.

Gasoline inventories are going to be closely watched, especially when comparing to last year as the next four weeks saw draws last year total more than 12 million bbl. Some of that decline could represent dumping of barrels due to RVP transitions last year, but also winter demand was very strong in light of low retail prices.

Outside of a 500,000-bbl draw on the East Coast, gasoline inventory moves were relatively small in the four other PADDs. Gasoline demand has been relatively flat of late, according to EIA, and last week’s measurement came in at 8.686 million b/d, a gain of just 22,000 b/d.

Vessel activity for gasoline was on the rise, with imports ticking higher and coming in at a rate of 457,000 b/d, representing a 90,000-b/d increase. At the same time, gasoline exports bumped up to 891,000 b/d, a move higher of 43,000 b/d.

Total distillate inventories were off by 900,000 bbl last week and have dropped in each of the last three weeks. The three-week decline in distillate inventories has narrowed the year-on-year surplus to just 600,000 bbl. The draw in the U.S. was largely on the back of a million bbl drop on the Gulf Coast, while the other regions of the country saw a move of 300,000 bbl or less. Some of the draw on the Gulf Coast may be attributed to a jump in distillate exports to 1.284 million b/d, a weekly increase of 277,000 b/d, according to EIA data. Last week’s U.S. distillate export rate of 1.284 million b/d is the highest since the week ending Dec. 23 last year.

Crude oil storage levels continue to set new records as total stocks increased another 1.5 million bbl, bringing total storage levels to 520.2 million bbl. Total crude inventories now hold a 33.5-million-bbl surplus to this time last year.

The build in crude oil inventories keeps the trend of builds so far in 2017 alive and well. Crude oil production increased once again and, at 9.032 million b/d, compares with the mid-March levels of 2016 when production was on the way down. In addition to the increase in output, refiners are running less crude oil and the rate of imports kicked back higher by about 300,000 b/d to 7.589 million b/d.

Overall, there was probably not too much for the market to get excited about as far as the key metrics in this week’s EIA data release. However, the report does set up for some interesting trend possibilities over the next couple of weeks.

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