According to the Energy Information Administration (EIA), U.S. petroleum inventories (excluding SPR) fell by 6.9 million barrels (mmb) last week. They stand about 52 mmb lower than the rising, rolling 5-year average and are about 149 mmb lower than a year ago. However, comparing total inventories to the pre-glut average (end-2014), stocks are 127 mmb above that average.
Commercial crude stocks fell by 2.6 mmb, and SPR stocks were unchanged last week. Gasoline stocks fell by 1.7 mmb, and distillate stocks fell 2.0 mmb. Primary demand dropped 256,000 b/d to average 20.675 million barrels per day (mmbd).
Crude Production
The EIA estimated (using its model, click here for presentation) that U.S. crude production averaged 10.407 mmbd, last week, a 26,000 b/d increase from the prior week and new record high. Production averaged 10.360 mmbd over the past four weeks, up 14.0 % v. a year ago. In the year-to-date, crude production averaged 10.141 mmbd, up 12.6 % v. last year.
Other Supply
I have previously noted in an article how the “Other Supply,” primarily natural gas liquids and renewables, are integral to petroleum supply. The EIA reported a 51,000 b/d increase last week. The 4-week trend in “Other Supply” averaged 6.210 mmbd, up 10.6 % over the same weeks last year. In YTD, they are 9.5 % higher in 2018 v. 2017.
Crude production plus other supplies averaged 16.570 mmbd over the past four weeks, an all-time-high record.
Crude Imports
Total crude imports fell by 508,000 b/d last week to average 7.077 mmbd last week. This figure was below the 4-week trend of 7.487 mmbd, which was off 4.8 % from a year ago.
Net crude imports fell by 594,000 b/d because exports rose 86,000 b/d to average 1.573 mmbd. Over the past four weeks, crude exports averaged 1.501 mmbd, 108 % higher than a year ago. Based on the recent spread between the OPEC Reference Price (ORB) and WTI, exports should be headed much lower in the weeks ahead.
U.S. crude imports from Saudi Arabia fell by 29,000 b/d last week to average 643,000 b/d. Over the past four weeks, Saudi imports have averaged 658,000 b/d, off 49.6 % from a year ago.
Crude Inputs to Refineries
Demand for crude at refineries rose by 410,000 b/d last week to average 16.777 mmbd. Over the past four weeks, crude inputs averaged 16.240 mmbd, 4.1 % higher than a year ago. In the year-to-date, inputs averaged 16.367 mmbd, up 3.3 % v. a year ago.
Crude Stocks
Over the past four weeks, crude oil supply exceeded demand by 30,000 b/d.
Commercial crude stocks are now 132.7 million barrels lower than a year ago.
Petroleum Products
Given the recent net product stock draws, product demand has exceeded supply by 557,000 b/d.
Total U.S. product stocks at 763 mmb are 44 million barrels lower than a year ago.
Product exports dropped by 169,000 b/d last week, averaging 4.993 mmbd. This figure is above the 4-week trend of 4.821 mmbd, which in turn is 2.1 % lower than a year ago. In the year-to-date, exports averaged 4.834 mmbd, off 0.9 % from a year ago.
Net gasoline exports decreased by 657,000 b/d to average 864,000 b/d over the past four weeks.
Demand
Total petroleum demand averaged 20.487 mmbd over the past four weeks, up 4.9 % v. last year. In the YTD, product demand averaged 20.600 mmbd, up 5.2 % v. the same period in 2017.
Gasoline demand at the primary stock level fell by 319,000 b/d last week and averaged 9.276 mmbd over the past four weeks, up 1.9 % the same weeks last year. In the YTD, it reported that gas demand is up 4.4 % v. a year ago.
Distillate fuel demand, which includes diesel fuel and heating oil, rose 85,000 b/d last week, averaging 3.899 mmbd over the past four weeks, down 4.5 % v. the same weeks last year. In the YTD, demand is up 2.8 % v. a year ago.
Jet fuel demand is up 4.8 % over the past four weeks. In the YTD, demand was 4.4 % higher v. 2017.
Product Stocks
Gasoline stocks are now 0.4 mmb lower than a year ago, ending at 243.1 mmb.
Distillate stocks are 24.3 mmb lower than a year ago, ending at 131.0 mmb.
Conclusions
A rise in crude demand at refineries combined with a drop in crude imports produced the unexpected drop in crude stocks. At the same time, crude exports remained high. Net crude and product imports averaged just 2.4 mmbd last week, off 2.6 mmbd v. the same week last year and more than one mmbd from the trend this year.
The market's bullish reaction was due to the impression that crude refinery turnarounds appear to be ending early, the stock build this season was small and appears to be ending. But that may not, in fact, be true. Crude exports should be dropping due to the arb to Asia closing a number of weeks ago. If the import/export trends correct in the weeks ahead, then stocks should rise further.
Check back to see my next post!
Best,
Robert Boslego
INO.com Contributor - Energies
Disclosure: This contributor does not own any stocks mentioned in this article. This article is the opinion of the contributor themselves. The above is a matter of opinion provided for general information purposes only and is not intended as investment advice. This contributor is not receiving compensation (other than from INO.com) for their opinion.
