U.S. commercial crude oil stocks are expected to have decreased 700,000 barrels in the week ended July 24, a survey of analysts showed Monday.
The U.S. Energy Information Administration (EIA) is scheduled to release its weekly data at 10:30 am EDT (1430 GMT) Wednesday.
The EIA five-year (2010-14) average shows inventories dipped slightly for the same reporting period, falling around 25,000 barrels.
A weekly decline would mark a turnaround after crude oil stocks unexpectedly increased 2.5 million barrels in the week that ended July 17.
Surging imports have offset record-high refinery activity, contributing to the counter-seasonal build in U.S. crude oil inventories.
For the week ended July 17, crude oil imports averaged 7.9 million barrels per day (b/d), well-above the year-to-date average of 7.251 million b/d.
A narrow gap between Intercontinental Exchange (ICE) Brent and West Texas Intermediate (WTI) encouraged U.S. refiners to seek cargoes from abroad, analysts said. ICE Brent's premium to WTI began to shrink in late April, and by the second-half of June, was trading around the $3 per barrel (/b)-$4/b range.
The ICE Brent/WTI spread has widened, but a lag of several weeks from tankers being fixed to arrival means the EIA data released Wednesday could show another week of strong imports.
One factor helping stocks draw lower has been refinery activity, which continues pushing into record territory.
For the week ended July 17, crude oil runs rose 45,000 b/d to 16.87 million b/d, a record, according to EIA data that goes back to 1982.
Analysts expect the refinery utilization rate decreased 0.2 percentage points last week to 95.3% of operable capacity. By comparison, the utilization rate for the same reporting period one year ago stood at 93.8%.
In refinery news, an undisclosed unit at Shell's 165,000 b/d Martinez, California, refinery was shut last week after an upset, according to a company filing. No other information was provided, and a Shell spokeswoman was unavailable for comment.
GASOLINE STOCKS DOWN
U.S. gasoline stocks are expected to have fallen 600,000 barrels last week, the analysts surveyed said.
The EIA five-year average shows gasoline inventories inched down 30,000 barrels in the comparable reporting week.
With U.S. refinery production running high, gasoline stocks on the Atlantic Coast sat at 60.8 million barrels the week ended July 17, a 3.9% surplus to the five-year average for the same reporting period.
Imports have also helped push up U.S. Atlantic Coast (USAC) gasoline inventories. For the week ended July 17, USAC gasoline imports increased 79,000 b/d to 713,000 b/d, well above the year-to-date average of 592,000 b/d.
Implied* demand equaled 9.749 million b/d the week ended July 17, which was 10% above the year-ago level, putting downward pressure on gasoline stocks.
Despite robust demand, supplies appear adequate to satisfy driving needs for the rest of the summer, analysts say.
That idea may help explain last week's market reaction, when EIA data showed U.S. gasoline stocks fell 1.7 million barrels for the week ended July 17, yet New York Mercantile Exchange (NYMEX) August reformulated blend stock for oxygenate blending (RBOB) saw the biggest decline across the oil complex, falling the equivalent of $2.24/b.
In refinery news, Phillips 66 performed unscheduled maintenance on its 146,000 b/d Borger, Texas, refinery, a company spokesman said last week.
The repairs involved the larger of two fluid catalytic crackers (FCC) at the facility, sources said. The larger FCC has a 34,000 b/d capacity.
U.S. distillate stocks are expected to have increased 400,000 barrels over the latest reporting week.
The EIA five-year average for the same reporting period shows inventories rising 750,000 barrels for the same reporting period.
Distillate exports tracked leaving the U.S. Gulf Coast (USGC) for Europe over the last seven days were around 465,000 metric tons (mt), according to Platts cFlow ship-tracking software, an estimate based on tankers' deadweight tonnage.
That represented an increase from the week prior, when 305,000 mt of distillates were seen leaving for Europe from the USGC.
Exports help lower inventories. Distillate products including diesel and gasoil typically represent the largest share of USGC product exports to Europe.
For the week ended July 17, ultra-low sulfur diesel (ULSD) stocks jumped 848,000 barrels to 121.9 million barrels, an all-time high for the fourth week in a row, according to EIA data going back to 2004.
By region, the biggest build was on the Atlantic Coast, where stocks rose 720,000 barrels to 38.69 million, a 25.7% surplus to year-ago levels.
*Implied demand is the amount of product that moves through the U.S. distribution system, not actual end consumption.