Conclusion: Further declines in US inventories, faster than even we predicted. Oil production growth is strong at close to 1mb/d and is now confirmed by the monthly data. The arb from Cushing to the USG for uncommitted barrels is now closed, which should slow down or reverse the Cushing draws, but PADD3 is very low in crude inventories too, so it could open again. As prices have moved even higher, with Brent at over USD70/bbl, we should start seeing an impact on demand going forward. We remain bullish for the WTI-Brent spread, which has closed substantially over the past week, but cautious for crude flat prices.
- Counter-seasonal draw of 2.7mb (5mb more than normal) in total petroleum stocks. The draw occurred mostly in crude (- 1mb) and there mostly in Cushing (-3.2mb). Products looked mixed, with a larger than normal build in distillates and gasoline.
- Total products supplied looks still out of whack with reality at 20.64mb/d. This is likely an accounting issue.
- Net imports up 0.9mb/d w-o-w but still 0.7mb/d below the already low levels last year
- Refinery utilization was down 2.1% w-o-w and inputs are back in line with last years levels, but the 4week average inputs remains above last years levels
- Crude output was up 128kb.d w-o-w, the adjustment factor recovered a bit from last weeks 970kb/d drop. Crude oil output is still up 0.9mb/d y-o-y but crude +adj. factor is now only up 0.5mb/d y-o-y.
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