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Commentary on the EIA’s oil inventory report 20/03/2013

Published Wednesday, March 20th, 2013

The latest report from the EIA on US oil stocks seems to be neutral although the main categories saw a drop in inventroy levels. Total commercial stocks registered their sixth consecutive weekly draw and they are 2.3% higher than a year ago and 2.7% above the 5-year average.

The draw in crude oil inventroies is misleading because the US West Coast dropped by 2.75 million bbls therefore the rest of the country actually built by 1.44 mln bbls. The fact that PADD2 fell 1.33 mln bbls and the USGC built 2.35 mln bbls could indicate that oil started to flow on the continuous basis from North to South. Crude oil inventories at Cushing dropped for the second week in a row but they are still much higher than a year ago or the 5-year average (+10.51 and +10.71 million bbls). Crude oil production at 7.15 mbpd is just a tad below crude oil imports (7.27 mbpd). The EIA thinks that production will exceed imports later this year for the first time since 1995.Despite the nationwide draw crude oil stocks are comfortable. They are 10.5% above last year’s level and 7.5% above the 5-year average.

Not even increasing refinery runs could stop product stocks falling although these draws were less than what the market expected. May be this general decline took place because the US remains a net exporter of products. Last week the balance stood at 1.29 mbpd, more than 400,000 bpd higher than this time last year.

On the historic basis the main product numbers are more on the positive side. Distillate inventories are 12.3% below last year’s level and 14.8% lower than the 5-year average. The same figures for gasoline are -1.8% and +0.2%

Total poduct demand rose 0.9% to 18.34 mbpd last week on the 4-week average basis. Distillate demand crawled up by 0.1% to 3.57 mbps and gasoline demand jumped by 1.5% to 8.48 mbpd on the same basis.

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.