EIA Weekly Report week ending October 12th, 2018
Highlights:
- For the week ending October 12, US Crude inventories built by 6.5 Mbbls, while analyst were expecting a smaller build of 2.2 Mbbls, but API was showing a 2.1 Mbbls draw.
- Gasoline inventory drew by 2.0 Mbbls, compared with API reporting a draw of 3.4 Mbbls.
- Distillate inventory drew by a small amount of 0.826 Mbbls, similar to API’s draw of 0.246 Mbbls, but analysts were expecting a larger drop of 1.3 Mbbls.
- Total Refinery Utilization is unchanged WoW at 88.8%
- Cushing inventory built by 1.8 Mbbls.
- Crude Imports increased by 217 kbpd, while exports are lower WoW by 0.8 Mbpd.
- Lower 48 crude production is lower by 300 kbpd.
- Real crude supply increased by 194 kbpd, with an adjustment factor of 357 kbpd.
- Finished gasoline production increased by 719 kbpd to 10.4 Mbpd and total distillate production decreased by 213 kbpd to 4.8 Mbpd.
- Total Product demand increased by 137 kbpd. Gasoline demand increased 104 kbpd, while Distillate demand decreased by 836 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 | -1 | 0 | -1 | 0 | 1 |
-4 |
- We are bearish on this week’s stats due to another week of higher than expected crude inventory builds, smaller draws in both gasoline and distillate inventory, higher crude imports and lower crude exports. The 6.5 Mbbls build in crude inventories is the 4th consecutive week where it has increased and last week the builds were across all regions, including Cushing, which has also built 4 consecutive weeks. Cushing inventories have now recovered quite well from the 5 year low range thanks to on-going PADD 2 refinery turnarounds.
- While product demand is higher WoW, the majority of the demand is coming from other oils and the lower distillate demand outweighs the small increase in gasoline demand.
- Total refinery utilization remains unchanged WoW, but PADD I has recovered from the previous week’s unusually sharp decline and PADD III increased 1.7%. PADD III saw the only build in distillate inventories last week and a likely reason could be product shipments to PADD I and II were somewhat lower, resulting in both respective regions seeing draws in distillate, and instead producers in PADD III continued to focus more on exports. Unfortunately, distillate exports the past week were not enough to offset the build coming from increased refining production.
- L48 production dropped 300 kbpd, which can be attributed to the temporary shut-in production due to Hurricane Michael this past week. This should not be perceived as bullish.
- Many analysts have stated that the harsh winter and the low distillate inventory globally will contribute to a rally in crude price. We are more neutral that the refineries have already taken steps to increase distillate production partly due to over-supplied gasoline market and partly due to low global inventory seen in Q2. This switch will likely continue into winter resulting in less of a concern of under-supplied market. However, the distillate – gasoline spread should continue to widen.
