EIA Weekly Report week ending November 02, 2018
Highlights:
- For the week ending November 2, US Crude inventories built by 5.8 Mbbls, while API was reporting a larger build of 7.8 Mbbls and analysts were expecting a smaller 2.4 Mbbls build.
- Gasoline inventory built by 1.9 Mbbls, whereas API reported a draw of 1.2 Mbbls.
- Distillate inventory fell by 3.5 Mbbls, which is in line with API’s 3.6 Mbbls draw, but analysts were expecting a smaller decline of 2.3 Mbbls.
- Total Refinery Utilization is up by 0.6% to 90.0%.
- Cushing inventory built by 2.4 Mbbls.
- Crude Imports increased by 196 kbpd and Crude Exports is lower by 80 kbpd. Total product exports is lower by 622 kbpd.
- Lower 48 crude production climbed by 400 kbpd to a new record level of 11.1 Mbpd.
- Real crude supply increased by 546 kbpd, with an adjustment factor of 467 kbpd.
- Finished gasoline production decreased by 650 kbpd to 9.7 Mbpd and total distillate production decreased by 20 kbpd to 4.9 Mbpd.
- Total Product demand decreased by 611 kbpd. Gasoline demand decreased 163 kbpd, while Distillate demand decreased by 108 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 | -1 | 1 | -1 | -1 | 1 | -1 | -3 |
- We are bearish on this week’s stats due to builds in crude and gasoline inventories, weaker product demand, higher crude imports and new record level L48 production.
- Gasoline demand has been slumping in the past 2 weeks and is now at a 5 year low for this time of year. The concerning part is that gasoline prices have also been declining, while refining margins remain poor in the face of crude prices plummeting. Normally if crude prices have fallen so drastically refining margins may still be supportive, but with product demand slumping into the end of the year at a time when refining utilizations are exceptionally low and crude feedstocks are getting cheaper, there may be more pain for product prices as refining sector continues to return from maintenance and until demand finally recovers to seasonal norms. Domestically, gasoline demand has weakening and gas prices have been declining to promote more consumption, but with winter around the corner it is hard to imagine gasoline demand improving much higher from current levels.
- Cushing has increased for the 7th consecutive week and is now at similar levels that was seen in June of this year. This is in part due to another record level US production of 11.6 Mbpd after jumping the highest WoW gain of 400 kbpd (also an adjustment to reflect monthly actuals). It was previously expected that US production would be capped due to pipeline capacity constraints, but with improved pipeline efficiencies and increased reliance on alternative transportation, US production has been able to continue growing. At this rate of growth, it is highly likely 180 days from now, US alone is able to back fill the supply / export loss from Iran.
