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Total US commercial stocks are the highest ever

Published Thursday, June 23rd, 2016

The latest statistics on US oil stocks was the complete opposite of that of last week. A week ago the API saw builds across the board whilst the EIA was much less bearish or should we say much more bullish. This time around a rather bullish API report was followed by a less than enthusiastic data set from the EIA. The initial reaction was a sell-off which continued throughout the London afternoon. At the end of the day WTI was 72 cents/bbl below Tuesday’s settlement level and Brent lost 74 cents/bbl. Heating Oil finished the day 119 cents lower and RBOB 47 points down.

Total commercial stocks rose by 5.2 million bbls and at 1.373 billion bbls they are the highest ever. Although crude oil inventories fell by 917,000 bbls this draw was much less than the API estimate of -5.2 million bbls. This decrease came as refiners ramped up their runs by 1.1% to 91.3% and despite crude oil imports registering a hefty jump of 817,000 bpd to 7.95 mbpd. Canadian crude oil imports do not seem to be affected by last month’s wildefires as they were nearly as much as 3.1 mbpd last week. Not even the 1.3 million bbl drop in Cushing stocks was able to provide price support. It is also noteworthy that domestic crude oil production is still falling as last week it was down by 39,000 bpd at 8.677 mbpd, the lowest since September 2014.

The increase in refinery utilization was coupled by a 582,000 bpd rise in gasoline output that stood at 10.29 mbpd whilst production of distillate was hardly changed at 4.96 mbpd. Gasoline stocks were up by 627,000 bpd and whilst this seems bearish in the light of the 1.5 million bbl draw from the API it has to be pointed out that demand for this product is at an all-time high of 9.815 mbpd. The slight rise in distillate inventories took stocks 12.5% above last year’s level and 17% over the 5-year average.

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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.