EIA Oil Inventory Preview: Product Draws 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 build by 216kbbls for the week ending 5th August following on from a build of 4.5mbbls last week. The WTI-Brent spread has closed slightly but remains at 6.6$/bbl and should still encourage strong crude exports. The build last week was driven by higher imports, strong production, and lower refinery utilization.
• Distillate and gasoline stocks are still below normal with distillate inventories last week nearly 25% below the 5-year average. A dip in refinery runs and strong exports to Europe and Latin America are keeping distillate stocks low and supporting the crack spreads despite weaker demand data. A survey suggests gasoline inventories are expected to draw by -1.15mbbls and distillates to draw by -1.05mbbls.
• After falling in recent weeks, the implied gasoline demand will be closely watched for any signs of recovery back towards normal levels on the back of lower US fuel pump prices. Gasoline demand figures from OPIS and Gas Buddy as well as US oil refiner comments in recent weeks suggest gasoline demand destruction is not as bad as EIA data indicates. Last week the 4-week gasoline demand was more than 1mbpd below the 2015-2019 seasonal average. The average US retail gasoline price has fallen back from a peak of 5.02$/gal in mid-June to the current price of just below 4$/gal.
• Refinery utilisation fell last week to the lowest since early May however East Coast refineries are still going strong. Utilisation may increase in the coming weeks with the expected restart of a crude unit at the Paulsboro refinery in August which was closed in 2020. Refining margins have fallen significantly in recent weeks due to concerns for demand, but they remain well above start of year levels. The US 321 crack is trading around 39$/bbl having started the year at 20$/bbl but peaked at 61$/bbl in June.
• The API data released last night showed a build in crude of +2.16mbbls, a build at Cushing of +0.91mbbls, a build in distillates of +1.38mbbl and a draw in gasoline of -0.63mbbl.