U.S. crude inventories likely climbed last week as many refiners remained in maintenance and imports climbed.

Analysts polled by S&P Global Platts were looking for crude stocks to have climbed 2.5 million barrels. A build of this size would put U.S. inventories at 435.65 million barrels, roughly on par with the five-year average, based on the most recent U.S. Energy Information Administration data.

And despite low refinery utilisation rates across the country, U.S. refiners are in the process of returning from fall maintenance. Analysts expect refiners to have increased operations by 0.5 percentage points to 85.7 per cent of capacity last week.

Roughly 2 million b/d of combined distillation capacity in the U.S. Midwest and U.S. Gulf Coast was down for maintenance last week, according to S&P Global Platts Analytics data. That was down from a peak 2.4 million b/d the week ending October 11. By the end of November, just 298,000 b/d of capacity is expected to be down for maintenance, bolstering crude demand.

U.S. crude output was expected to remain steady to higher, averaging at least 12.6 million b/d last week.

Crude imports remain the wild card, and will determine whether the weekly data shows a crude inventory build, as is typical this time of year, or another draw. Imports averaged 6.3 million b/d for the four weeks ended October 11, but then fell to 5.85 million b/d for the week ending October 18.

If this weaker level holds, U.S. crude inventories would likely draw.

Preliminary import data from the U.S. Census shows a decline in crude imports into the U.S. Gulf Coast for the seven days ended October 24. While imports from Mexico climbed, imports from Colombia and Brazil slid, the data showed. Census data also shows waterborne imports into the U.S. West Coast and U.S. Atlantic Coast falling.

But the Census import data does not necessarily line up with the EIA import data on a weekly basis. And Census does not track Canadian crude imports by pipeline and rail, which makes up the bulk of U.S. imports, and could start to rise as Midwest refiners return from maintenance.

U.S. crude exports likely slipped last week from the 3.3 million b/d figure EIA reported for the week ended October 18, which would also help to produce a stock build.

S&P Global Platts Analytics cFlow commodity flow software shows roughly 2.9 million b/d of crude exported from the US Gulf Coast last week, down from 3.2 million b/d the prior week.

Refined products drawing

In refined products, analysts were looking for U.S. gasoline stocks to have declined by 2.5 million barrels last week, and distillate stocks to have fallen by 2.4 million barrels.

A gasoline stock draw of 2.5 million barrels would put U.S. inventories at roughly 220.6 million barrels, just 1.7 per cent above the EIA’s five-year average. Gasoline inventories typically draw this time of year, and begin building in November as more refining capacity is back up.

U.S. distillate stocks follow a similar pattern, but are tight by comparison, particularly on the US Atlantic Coast, which is supportive for the New York-delivered NYMEX ULSD contract.

Combined low and ultra low sulphur diesel stocks at 32.7 million barrels the week ending October 18 on the USAC were 27 per cent below the five-year average, the EIA data shows.

The switch to IMO 2020 low sulphur bunker fuel in January is expected to boost demand for low sulphur diesel, which, combined with heating demand this winter, could bolster diesel prices going forward, especially considering low USAC inventories.

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30th October 2019