EIA ANALYSIS: US refiners ease off gasoline production

Quantum Commodity Intelligence - A sizeable 4-million-barrel build in US gasoline stocks, the first in seven weeks, coupled with a reasonable build in distillate stocks, up 2.2 million barrels, and little change in commercial crude stocks, down 900,000 barrels, would usually provoke a slide in oil prices.

But this week's data from the Energy Information Administration has been more than overshadowed by Omicron, the latest variant of Covid.

However, the data highlights the futility of the White House's attempt to cool US gasoline prices by taking on OPEC+ with strategic stocks rather than focusing on the domestic problem.

US refiners, which are struggling to kick up a gear, have been largely ignoring President Biden's gasoline pump price crisis over the last few weeks.

Finished gasoline production fell to 9.65 million bpd over the week to 26 November, down from 10 million bpd a week earlier.

There was a slight 100,000 bpd week-on-week increase in the adjusted gasoline production figure, including the volumes from blending in ethanol, but that was still down from the 9.9 million bpd seen over the week to 22 October.

Deliveries of gasoline last week, a proxy for implied demand, dropped sharply to 8.8 million bpd, down more than 500,000 bpd week-on-week, although this low figure, the softest since mid-September, may reflect the Thanksgiving holiday and people staying at home.

The rise in US gasoline stocks would have been larger after the EIA estimated a rise in gasoline exports over the week amounting to almost 2 million barrels, which was about 800,000 barrels more than the rise in imports.

Gasoline stocks gained to 215.4 million barrels, leaving them 5% below the five-year average for this time of year.

Meanwhile, distillates look very tight despite the build last week.

Stocks rose to 123.9 million barrels, but that still left them 9% below the five-year average.

Distillate fuel oil production nudged higher to almost 4.9 million bpd, but that was still very low compared to the 5.26 million bpd produced two years ago.

Imports of distillates dropped to just 234,000 bpd over the week, down from 332,000 bpd a week earlier.

Exports of distillates dropped even more, falling 420,000 bpd over the week.

Commercial crude stocks also remained tight. 

A 900,000-barrel fall in crude stocks almost reversed the 1-million-barrel gain seen a week earlier and left stocks at 433.1 million barrels, down 9% on the five-year average.

There was another draw from strategic stocks, down 1.9 million barrels, while domestic crude production nudged higher to 11.6 million bpd.

Stocks at Cushing, the home of WTI, gained 1.1 million barrels to relieve some of the pressure for the benchmark crude.

There was no change in the net crude import figure or US crude throughput over the week, which remained at 15.6 million bpd.

Refinery utilization rates nudged 0.2 percentage points higher to 88.8%, again much lower than the 91.9% seen two years earlier.