(John Kemp is a Reuters market analyst. The views expressed are
* Chart 1: tmsnrt.rs/2koIvZX
* Chart 2: tmsnrt.rs/2k8ZsZW
* Chart 3: tmsnrt.rs/2k97Bxp
* Chart 4: tmsnrt.rs/2k33gt6
* Chart 5: tmsnrt.rs/2k3689s
* Chart 6: tmsnrt.rs/2kZ3lm6
By John Kemp
LONDON, Feb 3 U.S. gasoline stocks are rising
much faster than normal at the start of the year, threatening to
leave refiners struggling to clear an overhang of motor fuel
later in the year.
Gasoline stockpiles rose by almost 21 million barrels during
the first 27 days of 2017, compared with an average increase of
less than 12 million barrels at the same time of year during the
Stocks have only risen this fast on one other occasion in
the last 10 years, and that was in 2016, when refiners and
blenders ended up with a large surplus which lingered through
the summer (tmsnrt.rs/2koIvZX).
Stocks hit a seasonal record of 257 million barrels on Jan.
27, according to an analysis of data from the U.S. Energy
Stocks are now 4 million barrels higher than in 2016 and
almost 26 million barrels higher than the 10-year seasonal
Stocks are rising faster than normal across the eastern
United States but especially on the East Coast and in the
East Coast stocks have risen by more than 8 million barrels
since the start of the year, almost double the average increase
of 4.7 million barrels (tmsnrt.rs/2k8ZsZW).
Midwest stocks are also up by 8 million barrels, more than
double the average increase of 3 million barrels at this time of
Gasoline stocks normally rise throughout January and
sometimes into early February as refiners and blenders build
reserves ahead of the refinery maintenance season (tmsnrt.rs/2k33gt6).
But the stock build in 2016 was exceptionally large as
healthy gasoline margins encouraged refiners to process an
unusually large volume of crude through the winter months.
Something similar appears to be happening in 2017 with
refineries processing much more crude than normal despite
unusual stock levels (tmsnrt.rs/2k3689s).
Refinery throughput has been running around 200,000 to
400,000 barrels per day higher than in 2016 since the turn of
the year (tmsnrt.rs/2kZ3lm6).
Refining margins have generally been higher than during the
winter of 2015/16 which has encouraged refineries to increase
their processing ("Key commodity prices and differentials",
Valero, Jan 2017).
Hedge funds have established the largest bullish position in
gasoline futures and options since July 2014 in anticipation
that prices will rise.
The forthcoming maintenance season should lower refinery
throughput and start cutting reported stock levels in the next
1-2 weeks. If maintenance is longer and heavier than normal it
could help eliminate excess inventories.
But the build up of stockpiles and concentration of hedge
fund positions will eventually have to be unwound at some point
and could temper any further rise in gasoline margins.
(Editing by Mark Potter)