Conclusion: The stats appear bullish at face value, but a large part of the inventory draws is a reversal from the very bearish stats over the past two weeks. On the bullish side, the sharp decline in implied demand has fully reversed. Importantly, despite US production creeping higher every week, this is not the reason why stocks have not been drawing more in our view. We think the relatively high net import number (high compared to the first few months of the year) prevents inventories from drawing much faster. Nevertheless, even with net imports at these levels, counter-seasonal stocks draws are likely to continue.
- After two weeks of builds, US petroleum inventories resumed their downward trend and declined 1.9mb, 7.1mb more than seasonal (and 2.7mb more than expected in the main categories)
- Crude drew 2.5mb, 2.2mb more than normal. All products except middle distillates showed counterseasonal declines.
- The decline in stocks was accompanied by a sharp reversal in implied demand, up 1.6mb/d wow and +230kb/d yoy. Implied demand for the main products look particularly strong this week. We have argued the past two weeks that the weakness in implied demand is likely a data issue which this weeks data seems to confirm. Hence we don’t think that demand is actually as strong as it is reported this week either.
- The counter-seasonal draw occurred despite a large pick up in net imports by 0.6mb/d wow. Net imports were down only 0.6mb/d yoy from typically around -1mb/d yoy earlier this year.
- Refinery utilization dropped 0.4% to 94%, still up 3.8% yoy
- Production increased 20kb/d wow, up 630kb/d yoy,
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