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Commentary on weekly EIA stats on US oil stocks 27/03/2013

Published Wednesday, March 27th, 2013

Despite the unexpectedly big build in crude oil inventories the latest stats from the EIA were probably more on the bullish side for two reasons. Firstly, total commercial stocks registered their seventh consecutive weekly drop. They are only 1.5% higher than  a year ago and 2.3% above the 5-year average. The secondly, the 4.5 million bbls fall in distillate inventories is much bigger than expected.

The build in crude oil stocks is more or less in line with the API number. This jump was possibly caused by crude oil imports increasing by 841,000 bpd to 8,113 mbpd. The lion’s share of this jump took place in PADD3 (+730,000 bpd) hence the 1.57 million bbl build in the USGC. Adding to the bearish sentiment in crude oil Cushing stocks grew by nearly 500,000 bbls. As a result of the nationwide build crude oil stocks are 9.2% higher than this time last year and 7.0% above the 5-year average. Needless to say that domestic crude oil production hit yet another 20-year high at 7.151 mbpd.

Both distillate and gasoline stocks fell despite refinery runs increased by 2.2% to 85.7%, a level not seen since the beginning of January. These draws could be due to net product exports that stood at 1.284 mbpd last week (1.565 mbpd of imports vs 2.849 mbpd of exports).

Distillate stocks were hardest hit in the US East Coast (-1.339 million bbls) where they fell to their lowest level since May 2008. The historic nationwide figures are not bearish either. Current inventroies in this product are 15.2% lower than last year and 17.0% below the 5-year average.

The draw in gasoline stocks was right between the forecast and the API estimates. This takes inventories in this product 1.0% below last year’s level and 0.5% above the 5-year average.

Total product demand stood at 18.38 mbpd last week on a 4-week average basis, up 1.2% on the year. Distillate demand rose 5.8% to 3.75 mbpd and gasoline demand fell 0.2% to 8.43 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.