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US total commercial stocks hit yet another historic high

Published Friday, February 19th, 2016

One has to admire the optimism that has been surrounding the oil market this week in the face of increasingly bearish developments. If you took a snapshot of prices this morning you would find week-on-week gains on all the contracts bar RBOB. These current weekly gains are occurring despite the Doha meeting promising us an output freeze rather than cut therefore ensuring further global stock builds this year. Moreover, Iran has refused to participate in the potential agreement and Saudi Arabia’s foreign minister was quoted yesterday as saying that it was not prepared to cut oil production.

Not that the weekly EIA report on US oil inventories was bullish. Total commercial, crude, Cushing and gasoline stocks have all climbed to fresh all-time highs and distillate inventories also increased. Crude oil imports grew by 800,000 mbpd so the 2.1 million bbls build in crude stockpiles is not surprising. What is surprising is that it is in stark contrast with the 3.3 million bbls draw reported by the API. In absolute terms there is a discrepancy of 5 million bbls between the two reporting agencies. There was a slight increase of 36,000 bbls in Cushing inventories yet WTI spreads performed very well with March/April gaining 16 cents/bbl and April/May 9 cents/bbl.

Refinery runs grew by 2.2% and reached 88.3% last week. The consequence of that was builds in both gasoline and distillate stocks. The former increased by 3 million bbls against a forecast of a +600,000 bbls. The latter jumped by 1.4 million bbls whilst estimates were for a draw of 1.5 million bbls. Record high crude oil stocks were swept aside as WTI settled 11 cents/bbl higher whilst Brent ended the session 22 cents/bbl lower. Heating Oil fell 87 points and RBOB took the biggest hit with a daily loss of 310 points.

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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.