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Commentary on weekly EIA US oil stock data 13/06/2012

Published Wednesday, June 13th, 2012

Latest figures on US oil stocks from the API were supportive, at least at first sight. Products, as well as crude oil inventories decreased on the weekly basis so the initial reaction of the market is positive. Whether the optimism will stay with us for the rest of the day remains to be seen. Total commercial stocks were up again, the eigth consecutive weekly increase. They are 26 mln bbls or 2.4% above last year’s level and 25 mln bbls or 2.3% above the 5-year average. Global US stocks are still at a comfortable level.

The draw in crude oil inventories was much smaller than the forecast but the fact that PADD4-5 increased 1.25 mln bbls meant that PADD1-3 dropped 1.35 mln bbls. Although imports were up by 160,000 bpd at 9,078 mbpd, refiners that increased their utilization by 1% to 92% are responsible for the crude oil draw. This is the highest level  in runs for more than four and a half years. Cushing inventories retreated from the all-time high reached last week but they are still  9.6 mln bbls higher than a year ago and 12.7% mln bbls above the 5-year average. Nationwide crude oil stocks are 18.9 mln bbls or 4.9% higher than this time of last year and 29 mln bbls or 7.6% above the 5-year average.  With domestic production on the rise there is no danger of crude oil shortage at the moment or for the foreseeable future.

The most bullish part of this week’s report is the 1.7 mln bbls draw in gasoline inventroies that came against expectations of a 1.1 mln bbls increase. It was due to combined draw of 2.9 mln bbls on Padd 1 and 3. Despite refinery runs increasing 1% in these territories the draw is possibly due to falling imports that were down 152,000 bpd at 684,000 bpd. Total gasoline inventories are 13.3 mln bbls or 6.6% below the year-ago level and 7.6 mln bbls or 3.8% below the 5-year average.

The minor draw in distillate stocks is more bullish than the forecast or the API figure and takes inventories in this product 20.8 mln bbls or 17.4% below last year and 16.2 mln bbls or 13.5% below the 5-year average. Product figures were more positive than crude so crack spreads should be and are strengthening.

Total product demand showed a contraction of 1.9% compared to a year ago on the 4-week average basis and is at 18.66 mbpd. Distillate demand is down 4.6% at 3.63 mbpd and gasoline demand fell 4.4% to 8.84 mbpd.

Posted by Tamas Varga

Tamas Varga has been in the oil industry since 1992 and with PVM for 18 years. During his time in the industry he has gathered a range of experience in the oil markets. At PVM Tamas is in charge of data collection and analysis.

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