Expected drop in refining runs to produce product stock draws. Crude inventory to continue reducing but at slower pace. Hurricane Florence to impact products demand and potentially pipeline supplies in Lower-Mid-Atlantic region.
Total hydrocarbon inventories increased by 10.1 MMB last week. Crude stocks dropped by 5.3 MMB, which was very closely aligned with our expectations, while aggregate clean products’ inventory built by 9.8 MMB (slightly above our forecasts). “Other products” stocks built by a massive 5.1 MMB. Crude stocks at Cushing decreased by 1.2 MMB, as higher outflows to US Gulf Coast and lower inflows from Canada more than offset reduced local demand. Strong refinery maintenance during September and October is expected to significantly reduce local demand in the weeks to come, which will soften the impact of strong outbound flows. However, another week of muted inflows is forecasted to drive stocks lower again this week, causing Cushing inventories to decrease by 1.1 MMB. EIA reported 10.4 MMB/D for the L48 and 452 MB/D for Alaska (from 446 MB/D during the previous week). The large fluctuation in L48 volumes was driven primarily by evacuations of offshore platforms ahead of Tropical Storm Gordon. We expect a partial recovery in offshore volumes in the week ahead, bringing L48 to 10.5 MMB/D. Along with 475 MB/D from Alaska, this will result in a rounded U.S. total of 11.0 MMB/D. We forecast refinery runs to decrease significantly to 17.33 MMB/D, as a result of increased planned outages in PADDs 2-3.LEARN MORE