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US Stock Movements

Source: OPEC 9/26/2013, Location: North America

Preliminary data for August shows that US total commercial oil stocks fell slightly by 0.7 mb, reversing the build of the last five months, to stand at 1121.2 mb. Despite this decline, inventories stood at 16.3 mb, or 1.5%, above last year at the same time and indicated a gain of 30.7 mb, or 2.8%, over the five-year average. The stock-draw was attributed to crude, which decreased by 3.1 mb, while products abated this fall, increasing by 2.3 mb.

US commercial crude stocks fell by 3.1 mb for the fourth month to end August at 360.2 mb. Despite this drop, US crude oil commercial stocks finished the month at 19.1 mb, or 5.6%, above the five-year average, while they were 2.3 mb, or 0.6%, lower than a year ago at the same time.

The bulk of the stock-draw came during the week ending 30 August, due to a combination of a decline of crude oil imports combined with higher crude runs. US crude oil imports fell by 119,000 b/d to stand at 8.3 mb/d, while US crude oil refinery inputs rose by 162,000 b/d to 15.9 mb/d. The increase in runs helped utilization rates to rise by 0.5% to 91.7% of capacity, which was 5.6 percentage points (pp) higher than last year at the same time.

Inventories in Cushing continued to decline, dropping by nearly 5 mb in August from a month earlier to stand at 34.8 mb. Crude stocks have fallen almost 16 mb since the week ending 24 May. The rapid fall in crude oil stocks has been due to recent pipeline developments, including the reversal of the 400,000 b/d Seaway pipeline from Cushing to the US Gulf Coast, as well as the reversal of the around 225,000 b/d Magellan Longhorn pipeline to carry crude from West Texas to Houston, rather than to Cushing.

The restart of the 250,000 b/d BP crude unit at Whiting refinery in June resulted in increasing utilisation rates to almost 94% of capacity in the US midcontinent, leading to higher crude demand from refineries also contributing to the decline in Cushing inventories. This stock-draw strengthened the WTI price relative to other benchmarks, leaving the Brent-WTI spread at around minus $5/b, compared to minus $20/b just five months ago.

Total product stocks rose in August for five consecutive months to stand at 761.0 mb, which is the highest level since September 2010. Since last April, US product inventories accumulated more than 51 mb on the back of higher refinery throughput. With this build, they stood at 18.6 mb, or 2.5%, higher than a year ago. Compared with the seasonal average, product stocks stood at 11.5 mb, or 1.5%, above the five-year average. Within products, the picture was mixed; gasoline, fuel oil and residual fuel oil saw a stock-draw, while distillates, jet fuel oil, unfinished products and propylene witnessed builds.

Distillate stocks rose by 3.1 mb, following three consecutive months of a build to stand at 129.6 mb. Despite this build, they still indicated a deficit of 21.7 mb or 14.3% below the five-year average, while they switched the deficit in the previous month to a surplus of 1.7%. A decline of around 180,000 b/d in apparent demand contributed to the build in distillate stocks. Higher distillate output also supported the build in stocks. In contrast, gasoline stocks fell by 7.6 mb in August, after declining by 1.3 mb in July to stand at 216.0 mb. At this level, gasoline stocks stood at 15.3 mb, or 7.6%, above a year ago, and 8.5 mb or 4.1% higher than the seasonal average. The draw in gasoline stocks was driven mainly by higher gasoline demand during the summer season.

Indeed, gasoline demand in August increased by around 100,000 b/d, to average 9.2 mb/d. However, higher gasoline production limited a further drop in gasoline stocks.

Residual fuel oil stocks also fell by 1.2 mb to finish the month of August at 36.2 mb. At this level, they were 2.1 mb, or 6.0%, higher than a year ago, but indicated a slight deficit of 0.5 mb or 1.4% over the seasonal norm. In contrast, jet fuel stocks rose by 1.1 mb in August to stand at 39.6 mb, remaining 3.7 mb, or 8.5%, lower than the same month a year ago and 4.5 mb, or 10.3%, below the latest five-year average.

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