Conclusion: Another week of counter-seasonal draws. The draws continue to be concentrated in Crude. Cushing, the point of delivery for WTI contracts, continues to draw very fast as the arb to the USGC remained open for another week. The draws happened amidst a sharp recovery in net imports. Net imports were “only” 1.25mb/d below last years level, after multiple weeks of extremely low imports. This is now closer to the import levels we saw earlier this year (~-1mb/d y-o-y). It appears that globally the crude market is in a larger deficit as record exports don’t seem to impact Brent prices at all, which remain in backwardation. We believe this will likely continue for another couple weeks, which should help closing the gap between WTI and Brent. But high prices might start having an impact on global crude demand going forward, which is why we are a little bit more cautious on flat price, even though we still on the bullish side.
- Total draw of 2.3mb vs seasonal build of 1mb. Crude drew 5.1mb, 2mb more than normal and Cushing drew a whopping 4.7mb more than normal. Products are a mixed bag. Distillates drew heavily (5.5mb more than normal) but all other products built vs. normal. Propane accounted for 1.8mb of the counter-seasonal build, which makes the inventory picture slightly more bullish than the total number suggests.
- Crude stocks fell now solidly below 2015 levels and Cushing stocks are dropping fast. Crude stocks are 42.8 lower year- over-year and total petroleum stocks are 95.6 mb lower.
- Implied demand up 0.5mb/d at 20.5mb/d, 4 week average in line with last years levels
- Imports up 0.5mb/d, exports down 0.8mb/d sharp recovery in net imports to 4mb/d, which is “only” 1.25mb/d below last years levels.
- Refinery runs down 0.4% to 93.4%, which is still a seasonally high, while intakes are at seasonally record levels
- Production increased 73kb/d this week, up 1.08mb/d year-over-year
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