EIA Weekly Report week ending August 10, 2018
Highlights:
- For the week ending August 10, US Crude inventories saw a build of 6.8 Mbbls, compared with analysts’ expectations of a 2.5 Mbbls draw and a 3.7 Mbbls draw from API.
- Gasoline inventory drew by 0.740 Mbbls, compared with API reporting a draw of 1.6 Mbbls while analysts expected gasoline to draw 0.583 Mbbls.
- Distillate inventory built by 3.6 Mbbls, compared with analyst expectations of 0.964 Mbbls build while API reported a 1.9 Mbbls build.
- Refinery Utilization increased by 1.5% to 98.1%.
- Cushing inventory saw a build of 1.6 Mbbls.
- Crude Imports increased by 1,084 kbpd and Exports are lower by 282 kbpd. Crude exports are lower WoW by 258 kbpd.
- Lower 48 crude production is unchanged WoW.
- Real crude supply is higher by 1,509 kbpd with an adjustment factor of 631.
- Finished Gasoline production increased by 321 kbpd to 10.2 Mbpd and Distillate production increased by 100 kbpd to 5.3 Mbpd.
- Total Product demand is lower by 741 kbpd. Gasoline demand is higher by 166 kbpd and Distillate demand is lower by 43 kbpd.
Our Interpretation:
Bullish = +1
Bearish = -1
Scale = -9 to +9
| Crude Inventory | Gasoline Inventory | Distillate Inventory | Product Demand | Product Supply | Crude Imports | Crude Exports | Ref Utilization | L48 Crude Production |
Bullish/Bearish (+/-) |
| -1 | 0 | -1 | 0 | -1 | -1 | -1 | 1 | 0 |
-4 |
- We are bearish on this week’s stats due to a large and unexpected build of 6.8 Mbbls in crude inventories, build in distillate stock, lower product demand and lower exports.
- Crude imports were higher by 1,084 kbpd WoW, but majority of the increased imports was into PADD I and PADD V, which are regions of susceptible to inconsistent import levels. These import levels also attributes for the higher level of crude stocks from both regions, as those regions runs rates did not improve high enough to offset the increased import levels. Additionally, it is worth noting that Saudi Arabia’s import reached 1.2 Mbpd the highest level seen this year. This was the effort Saudi Arabia made to please Trump’s comment on high gasoline price in the America. However, this level is unlikely to sustain going forward given their own crude burn demand is rising while July production is reportedly lower in the Kingdom.
- Distillate exports declined roughly 185 kbpd which equates to approx. 1.2 Mbbls additional export backlog over the course of last week. However, since the total build in distillate inventory was 2.7 Mbbls and demand loss was approx. 300 kbpd, the rest of the build was due to increased run rates in PADD III (99.7%), which is at the highest level it has ever been.
- Total refinery utilization for this period is higher YoY by 2.0% and it is expected to maintain these levels until seasonal refinery maintenance beginning mid-September. The refinery maintenance is expected to peak at the end of September and will be completed late to mid October. However, current global margins are substantially higher compared to last month and as a result, we might see refinery turnaround activities to be pushed back or scraped to capture this healthy margins. Further, it’s also worth mentioning that the elevated run rates could also trigger unforeseen refinery turnarounds as the machines are running their max capacity especially in PADD 2, 3 and 5.
