New York - January 16, 2013

U.S. crude oil inventories fell last week, contrary to analyst expectations, as a fall in imports outpaced a decline in refinery inputs, data released by the U.S. Energy Information Administration (EIA) showed Wednesday.


Commercial crude stocks fell by 1 million barrels to 360.3 million barrels over the week ended January 11, due in large part to a 312,000-barrel-per-day (b/d) decline in crude imports over the course of the week.


Imports slid to 7.987 million b/d, down from 8.299 million b/d the week previous.


The surprise decline in crude stocks ran counter to data from the American Petroleum Institute (API) on Tuesday, which showed a modest 46,000-barrel gain in U.S. crude inventories, while analysts polled by Platts on Monday predicted a 2.5-million-barrel build over the course of the week in anticipation of a further reversal of a heavy 11-million-barrel selloff immediately ahead of the new year.


Crude inventories historically climb over the first few weeks of the new year as refiners restock after running down crude inventories for year-end tax purposes.


Imports from many of the main U.S. crude oil trading partners fell over the course of the week, the EIA data revealed. The sharpest decline was in Saudi Arabian crude imports -- the U.S.' second-largest supplier of imported crude -- which plunged by 22% over the course of the week, falling from 1.295 million b/d to 1.004 million b/d.


Recent reports have shown that Saudi Arabian oil output has fallen steadily since August 2011, when Platts estimated Saudi output at 10.1 million b/d. An industry source said late last week that Saudi Arabia produced 9.025 million b/d in December, down from 9.49 million b/d in November.


The decline in crude stocks was particularly pronounced on the U.S. Gulf Coast, where commercial stocks dropped 3.8 million barrels to 158.8 million barrels. Stocks also declined along the East Coast, where stocks fell 1.2 million barrels to 9.8 million barrels.


There was a gain of 2.3 million barrels in the Midwest, the EIA reported, which saw stocks rise to 117.4 million barrels, 1.8 million barrels of which was concentrated in Cushing, Oklahoma, the delivery point of the New York Mercantile Exchange (NYMEX) crude futures contract. Cushing stocks climbed to a record 51.9 million barrels.


The climb was in line with the API's reports from Tuesday.


The newly expanded Seaway pipeline reopened Friday with an increased capacity to 400,000 b/d, up from 150,000 b/d. Analysts expect the expansion to alleviate some of the supply overhang in the Midwest.


Refinery inputs fell 156,000 b/d to 15.101 million b/d.


Gulf Coast crude oil inputs declined by 269,000 b/d over the reporting week.


Despite the week's draw, data showed that crude stocks remain nearly 11.81% above the rolling five-year average of 322.233 million barrels.


U.S. Products Continue to Build


U.S. gasoline stocks rose 1.91 million barrels to 234.995 million barrels last week, largely on a steep build in U.S. Gulf Coast stocks, which jumped 2.377 million barrels to 83.8 million barrels.


Analysts polled Monday by Platts expected a 3-million-barrel build in gasoline stocks.


Stocks on the U.S. Atlantic Coast (USAC) -- home to the New York Harbor-delivered NYMEX RBOB contract -- rose 521,000 barrels to 53.454 million barrels. The build narrowed the regional deficit to the EIA five-year average to 9.4%.


USAC gasoline production rose 278,000 b/d to 2.792 million b/d.


Meanwhile, U.S. gasoline demand rose 310,000 b/d to 8.32 million b/d, more than 4% above year-ago levels.


U.S. distillate stocks rose 1.686 million barrels to 132.43 million barrels, in line with analysts' expectations.


U.S. ultra low sulfur diesel (USLD) stocks jumped 3.041 million barrels to 102.912 million barrels, highest since the week ended February 17. Higher sulfur heating oil stocks fell 1.62 million barrels to 23.753 million barrels.


Meanwhile, the build in total distillates was supported by a 2.285 million-barrel build in Gulf Coast stocks, which rose to 39.344 million barrels.


Gulf Coast ULSD stocks rose 2.365 million barrels to 30.999 million barrels.


Atlantic Coast heating oil stocks fell 1.751 million barrels to 15.365 million barrels, putting inventories just under 50% below the EIA five-year average.


U.S. demand for distillates rebounded 360,000 b/d last week to 3.446 million b/d, up from 3.086 million b/d the reporting week ended January 4. However, the figure is still 5.24% below the EIA's five-year average.


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