Crude stockpiles fall less than expected

MOSCOW (MRC) -- US crude oil stockpiles fell less than expected last week, while gasoline stocks posted a hefty surprise build ahead of the Memorial Day long weekend as refiners boosted their rates to the highest in five months, reported Reuters with reference to the Energy Information Administration.

Crude inventories fell 282,000 barrels in the week to May 24, compared with analysts’ expectations for a decrease of 857,000 barrels and the industry group the American Petroleum Institute report of a 5.3 million-barrel draw.

Stocks edged down from the previous levels which were the highest since July 2017. However, at 476.5 million barrels, they were about 5% above the five year average for this time of year.

Net US crude imports fell last week by 476,000 barrels per day (bpd) and crude production rose 100,000 bpd, back to its record high at 12.3 million bpd.

Crude stocks at the Cushing, Oklahoma, delivery hub fell by 16,000 barrels, EIA said.

Crude prices extended losses after the data was released. U.S. crude dropped USD1 a barrel to USD57.81 by 11:29 a.m. EDT (1529 GMT), while Brent crude was down USD1.91 a barrel at USD67.56.

Refinery crude runs rose by 189,000 bpd and utilization rates jumped 1.3 percentage points to 91.2 percent of total capacity, their highest since January, EIA data showed.

“This increase in refinery utilization has resulted in another significant increase in gasoline inventories, which is pressuring gasoline prices,” said Andrew Lipow, president of Lipow Oil Associates in Houston.

Gasoline stocks rose by 2.2 million barrels, compared with analysts’ expectations in a Reuters poll for a 528,000-barrel drop, and were about 1% above the five year average for this time of year, the EIA said.

US Gulf Coast gasoline inventories climbed to the highest levels for May on record, according to the data.

The Memorial Day holiday weekend is considered the start of the summer driving season and the peak demand season for gasoline.

Distillate stockpiles, which include diesel and heating oil, fell by 1.6 million barrels, versus expectations for a 564,000-barrel increase, the EIA data showed.
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MOSCOW (MRC) -- The Czech oil refinery at Litvinov, owned by PKN Orlen unit Unipetrol, in the early May started receiving oil from state emergency reserves due to halt in Russian supplies via the Druzhba pipeline, news agency CTK reported, citing the head of state reserves Pavel Svarc, said Reuters.

Svarc said a loan from the state reserves would be enough to cover 15-20 days of operation at the refinery, one of two oil processors in the country.

Poland, Germany, Ukraine, Slovakia and other countries halted Russian oil imports via the Druzhba pipeline last week after finding contaminants that could damage refinery equipment.

Belarus said that clean oil had reached its territory after corrective measures were taken but would not reach its Mozyr refinery before May 4.

Svarc said clean oil from Druzhba could reach the Czech Republic around May 15. The country has another pipeline bringing oil from the Italian port of Trieste.
MRC

MOSCOW (MRC) -- Asia’s oil refiners are considering reducing output after margins slumped to their lowest for the season since 2003, said Hydrocarbonprocessing.

Companies that planned to trim output include SK Energy, a unit of SK Innovation, the Singapore Refinery Company (SRC), owned by PetroChina and Chevron Corp and at least one refiner in Thailand, five people familiar with the matter said.

In China, independent refiners known as ‘teapots’, which account for about a fifth of the country’s crude imports, operated at below 50% of capacity on average in April through May, versus 64% in the first quarter, said Zang Wengang, an analyst with Sublime Information Co. A spokeswoman for SK Innovation spokeswoman declined to comment, while SRC did not respond to a request for comment.

The people familiar with the matter declined to be identified because they are not authorized to speak to media. Rising crude purchasing costs have hit refiners’ bottom line. “We plan to lower (the operating rate) a bit...soon,” one of the sources said.

Spot crude cargoes have sold at multi-year high premiums as U.S. sanctions on Iran and Venezuela reduced supplies for Asia while a crisis in Russia over contaminated crude boosted Brent prices.

Meanwhile, excess supplies of light products, gasoline and petrochemical feedstock naphtha have squeezed margins further. Margins at a refinery complex in Singapore are at their lowest for this time of the year since 2003, even narrower than lows seen in 2009’s global financial crisis, data showed.

The profits are more than USD3 a barrel lower than the average for the past decade since 2009. Next month, Middle East producers led by top exporter Saudi Arabia are set to raise official selling prices (OSP) for a fourth straight month to track stronger spot markets.

Crude prices “are too high while product cracks (profit margins) are getting worse,” another source from a north Asian refiner said, adding that refiners are cutting cost by buying cheaper straight-run fuel oil to process at secondary refining units.
MRC

MOSCOW (MRC) -- Shareholders of two German refineries are arranging crude tanker shipments via the Baltic Sea in response to the halt of import flows on the Russian Druzhba pipeline, a spokesman for industry group MWV said, as per Reuters.

He said that one tanker had been discharged in the Polish port of Gdansk to ship oil to the Leuna refinery while the German port of Rostock was preparing to receive a shipment to feed to the nearby Schwedt refinery.

Both refineries had sufficient on-site inventories to keep operating for the time being, he said.

He declined to give further details, saying it is policy in the Mineraloelwirtschaftsverband to leave further internal communications up to member firms.
MRC

MOSCOW (MRC) -- Total is set to start up a biodiesel refinery using palm oil whose planned launch last summer sparked opposition from farmers producing vegetable oil and from environmental activists, reported Reuters.

The refinery in La Mede in southern France will begin production in two weeks, Chief Executive Patrick Pouyanne told journalists on the sidelines of the company’s annual shareholders’ meeting last Wednesday.

"Operationally the project is starting," he said.

The start-up of the 500,000 tons-per-year refinery has been delayed several times.

Farmers expressed concern about palm oil competing with locally produced vegetable oil and environmental activists cited the deforestation caused in producing it.

Palm oil cultivation results in excessive deforestation and its use in transport fuel should be phased out, the European Commission concluded in February, although it granted some exemptions production by smallholdings or on unused land.

Total, which has invested around 200 million euros (USD223 million) to convert the loss-making crude refining unit to biodiesel, hopes those exemptions help convince France to overturn its plan to end subsidies for adding palm oil to diesel.

"We can have a refinery that is competitive," Pouyanne said. If the French law is not changed, La Mede will not be competitive with its European peers," he said.

Total has committed to using less than 300,000 tons of crude palm oil per year at La Mede out of a total of 650,000 tons, with the rest coming from oils from other plants, recycled animal fat, cooking oil and industrial oil.

As MRC wrote before, in December 2017, Total inaugurated the new units at its Antwerp integrated refining & petrochemicals platform, which havdprogressively started up in the previous few months.

Total S.A. is a French multinational oil and gas company and one of the six "Supermajor" oil companies in the world with business in Europe, the United States, the Middle East and Asia. The company's petrochemical products cover two main groups: base chemicals and the consumer polymers (polyethylene, polypropylene and polystyrene) that are derived from them.
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