EIA Oil Preview: Stock Builds and Higher Refinery Utilisation Expected

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

• Crude inventories are expected to build by +0.35mbbls for the week ending June 2 according to a Bloomberg survey. Crude inventories built last week due to a surge in crude imports and despite a drop in production and a larger than expected refinery utilisation rate. SPR inventories have fallen 1.8mbpd with a total of 17.9mbbls delivered of the 26mbbls sale for April to June. The WTI-Brent spread has drifted lower this week to a low of around -4.5$/bbl with weak US demand weighing on WTI. Cushing stocks last week increased to their highest since early March and AlphaBBL is expecting another build of +1.69mbbls this week.
• Refinery utilisation is expected to continue its trend higher with a Bloomberg survey suggesting an increase of +0.43% to 93.5% following on from the big increase last week.
• Gasoline stocks are expected to show a small build of +0.41mbbls and distillates a build of +0.91mbbls according to a Bloomberg survey. Gasoline stocks drew last week with an increase in demand and higher exports, while a distillates build was assisted by an increase in production and decline in implied demand. US diesel and gasoil exports to Europe in May rose to the highest level since August 2019, as Europe replaced missing Russian imports with US products, while Brazil has been replacing US products with Russian origin supplies.
• Gasoline cracks are still seeing more support than diesel from low US inventories and the potential demand boost from the summer driving season with retail prices nearly 25% below year ago levels. US imports of European gasoline increased 88% in the week to 1 June from a seven week low the previous week. EIA four week implied demand for gasoline increased in the week to 26 May in line with the seasonal trend although weekly US gasoline demand was 2.7% below the moving four week average according to GasBuddy data on 5 June.
• The API data released last night showed crude stocks draw of -1.71mbbls but a +1.54mbbls build at Cushing. Gasoline inventories showed a build of +2.42mbbls and distillates a big build of +4.50mbbls.