EIA Weekly Report week ending August 31, 2018
Highlights:
- For the week ending August 31, US Crude inventories saw a draw of 4.3 Mbbls, compared with analysts’ expectations of a 1.3 Mbbls draw and a 1.2 Mbbls draw from API.
- Gasoline inventory built by 1.9 Mbbls, compared with API reporting a build of 1.0 Mbbls while analysts expected gasoline to draw 810 kbbls.
- Distillate inventory built by 3.1 Mbbls, compared with analyst expectations of 742 kbbls build while API reported a 1.8 Mbbls build.
- Refinery Utilization increased by 0.3% to 96.6%.
- Cushing inventory saw a build of 549 kbbls.
- Crude Imports increased by 228 kbpd while exports are lower WoW by 271 kbpd.
- Lower 48 crude production is higher by 100 kbpd.
- Real crude supply is lower by 84 kbpd with an adjustment factor of -174.
- Finished Gasoline production decreased by 22 kbpd to 10.2 Mbpd and distillate rose by 260 kbpd to 5.4 Mbpd W-o-W.
- Total Product demand is lower by 474 kbpd. Gasoline demand is lower by 165 kbpd and Distillate demand is lower by 147 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 | -1 | -1 | 0 | 0 | -1 | -1 | 0 | -1 | -4 |
- We are bearish on this week’s stats due to higher than expected build in products, higher crude imports and lower crude exports. Export and import readings are probably misleading largely due to tropical storm Gordon headed towards the U.S. Gulf Offshore forcing ships to be diverted or demurrage.
- The majority of the draw in US crude inventories came from PADD II (-1.6 Mbbls) and PADD III (-2.4 Mbbls). While PADD II refinery utilization dropped 2% WoW both PADD II and PADD III are running very high at 98% and 97.2%, respectively. This is likely due to expected turnarounds starting soon and strong margins. Given the margins remain quite healthy, we could expect the upcoming refinery turnaround activities to be softer than expected as refiners elect to defer maintenance.
- Products demand appear to be soft this week but on a seasonal basis it marked new five year high and about 8% higher than same time last year contributed by both gasoline and distillate.
- The 3.1 Mbbls build in distillate inventories is attributable to PADD II and PADD III’s high run rates along with weaker domestic and international demand. W-o-W we feel that the build in distillate inventories is bearish, but something to consider is that the total US distillate stocks are still on the lower end of the 5 year range, coupled with upcoming seasonal demand starting around October then the build is somewhat welcomed.
