EIA Weekly Report

EIA Weekly Report week ending June 29, 2018

Highlights:

• For the week ending June 29^th, US Crude inventories saw a surprise build of 1.2 Mbbls, compared with analysts’ expectations of a 3.5 Mbbls draw and a 4.5 Mbbls draw from API.
• Gasoline inventory drew by 1.5 Mbbls, compared with API reporting a draw of 3.0 Mbbls while analysts expected a 0.8 Mbbls draw.
• Distillate inventory was relatively unchanged for another week increasing only 132 kbbls, compared with API reporting a 0.438 Mbbls draw while analyst expectations showed a 0.5 Mbbls draw.
• Refinery Utilization decreased by 0.4% to 97.1%.
• Cushing inventory saw a draw of 2.1 Mbbls.
• Crude Imports increased by 698 kbpd and Exports are lower by 1.9 Mbpd. Crude exports are lower WoW by 664 kbpd.
• Lower 48 crude production is unchanged WoW.
• Real crude supply is higher by 1.4 Mbpd with an adjustment factor of 212.
• Finished Gasoline production increased by 169 kbpd to 10.3 Mbpd and Distillate production increased by 67 kbpd to 5.4 Mbpd.
• Total Product demand is higher WoW by 977 kbpd. Gasoline demand is higher by 138 kbpd WoW and Distillate demand is higher by 514 kbpd WoW.

 

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	1	-1	-1	-1	-1	1	-2

 

• We are bearish on this week’s stats due to a surprise build in crude inventories, higher crude imports, lower crude exports and higher real crude supply.
• As anticipated Cushing inventory continued to draw down further and there are now conflicting reports of when Syncrude production will restart. On Wednesday (July 4^th) there were reports of Suncor taking important steps towards restarting, but Suncor spokeswoman Sneh Seetal, stated that there is no update on the timetable and Syncrude is expected to remain down through this month. The WTI Houston pricing WoW has fallen by $2.70/bl to a premium of only $1.95/bl and the typical pipe cost from Cushing to the Gulf Coast is roughly $2.00/bl. Based on this latest physical pipeline assessment there is less incentive for spot barrels to flow, which is likely the reason why the draw down at Cushing is less than the prior week.
• Export levels were lower WoW and it was within our expectations that a correction would happen. Also, if China pushes forward with tariffs on US crude imports there may be lower export levels in the short term due to prompt month pricing being skewed and until trade flows are adjusted. China accounts for the majority of US crude shipped to Asia, so it’ll remain to be seen (if the tariffs are imposed), whether or not other Asian importers (South Korea, Taiwan and India) will import more US crude or if the US will need to find alternative buyers. It is expected that China can easily replace their US crude imports from alternative sources from Saudi Arabia, Russia and possibly even Iran, as Iran is being pressured by the renewed US sanctions (effective Nov 4^th).