EIA Oil Preview: Small Crude & 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 draw by -1.08mbbls for the week ending 22nd July according to a survey. US stocks are still near the bottom of the 5-year range despite building over recent weeks.
• The crude inventory reduction last week was led by a decline in Gulf Coast stocks due to jump in crude exports. The ever-increasing Brent premium to WTI is encouraging strong exports. Europe is still looking to replace Russian supplies from alternative sources. Concerns for the US economy are weighing on WTI ahead of the expected rate hike from the US Fed later today. The WTI-Brent spread averaged -7.3$/bbl last week and has since widened even further to over -9$/bbl. SPR stocks are now down to 480mbbls with inventories expected to fall near to 380mbbls at the end of the planned US release. Crude oil production has fallen back below 12mbpd over the last couple of weeks which has supported crude prices with global supplies so tight.
• Distillate exports are limiting any potential for a build in US stock levels which remain well below normal levels. Products are not expected to show much change with gasoline expected to draw by -109kbbls and distillates to build by +2.4kbbls.
• Gasoline demand has fallen over recent weeks counter to the normal seasonal summer strength. Falling US pump prices may help to support demand towards the end of the summer.
• The API data released last night showed a draw in crude of -4.04mbbls and draws in both gasoline and distillates of -1.06mbbl and -0.55mbbl respectively. The expectation of draws is likely to support both crude and product markets with supply so tight and stocks still low despite the recent pick up in crude and gasoline inventories.
• Refinery utilization has fallen back from a peak of 95% over the last couple of weeks but remains above normal as refiners try to keep up with demand and replenish low stock levels. Margins have fallen back over the last month but remain over double the levels seen at the start of the year.