EIA Inventory Preview: Small Product Builds Expected

EIA Oil Inventory Preview: The EIA weekly petroleum status report will be released at 10:30 EDT (15:30 BST) today

• Crude inventories are expected to draw by -1.48mbbls for the week to 10th June. US crude exports fell last week but a widening WTI-Brent spread should start to encourage strong exports again. This may be reflected more strongly in the data next week. The WTI-Brent spread has gradually widened over the last week from about -3.35$/bbl to -5.0$/bbl. The US was a net importer of oil and products for the first time since February due the to the fall in exports. Continuing SPR releases are keeping crude imports low and production has remained largely unchanged since mid-April. US crude inventories were 72mbbls below the 5-year average despite the rise last week.
• Refinery utilization has continued to rise with the US total up to 94.2% and crude processing at its highest since Jan 2020 despite refinery closures during the pandemic. Midwest utilization increased to 94.2% but with a couple of refineries still in the middle of a period of maintenance there is still room for further increases.
• Gasoline demand continues to show resilience despite the high pump prices and will be closely watched again this week. Demand is slowly increasing towards seasonal normal levels.
• A rise in distillate inventories last week eased the East Coast situation but stocks are still below the 5-year range. Refinery run rates show they are trying to maximise output at these high margins but there is some way to go to reduce the tight supply conditions. Gasoline is expected to build by +0.22mbbls and distillates by +0.17mbbls.
• The API data released last night showed a build in crude of +0.74mbbls, a draw in gasoline of -2.16mbbl and small build in distillates of +0.23mbbl. The strength in gasoline and diesel cracks continues to be fuelled by tight supply and low inventories. The US 321 crack spread bounced between about 55$/bbl and 62$/bbl last week.
• Cushing stocks were 30% below the bottom of the 5-year range last week and API data last night showed a further draw of -1.07mbbls. Concerns of US inflation have pushed WTI down relative the Brent over the last week but further draws from the EIA data could help to halt the trend.