Our quick take on the WEEKLY SUPPLY ESTIMATES published by the US Department of Energy (DOE) including detailed tables and charts. This week’s highlights:
Conclusion: Extremely bearish stats at face value. However the large inventory build came on the back of a suspicious collapse in implied demand and a large increase in net imports. The latter is likely timing and could simply reverse already next week. In our view it is also unlikely that demand has taken such a hit. We believe this weeks stats will reverse over the coming weeks and the inventory drawdown continues.
- Total petroleum inventories saw a huge build last week, up 15.5mb, 12mb more than normal. The lions share is crude (+3.3mb, +6.3mb vs seasonal), but also mogas and distillates built meaningfully
- Implied demand dropped 1.4mb/d w-o-w, down 1mb/d y-o-y. In our view this is probably a data issue, it is very unlikely that actual demand all the sudden crashed to this extent
- The other driver for the stock build is a huge increase in net imports by +1.5mb/d w-o-w, driven by lower exports of crude and “other” of a whopping 1.2mb/d and an increase of crude imports by 0.35mb/d. Again, we don’t think last weeks data reflects a collapsing crude export market but is rather a timing issue.
- Refinery utilization dropped 0.9% but still remains at seasonally very high 94.1%.
- Even though output declines 24kb/d w-o-w, it is still growing 0.6mb/d y-o-y
View the entire Research Piece as a PDF here.
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