EIA Oil Stocks Preview: Crude Build and Lower Refinery Runs Expected

EIA Oil Inventory Preview: The EIA weekly petroleum status report will be released at 11:00 EDT (16:00 BST) today

• Crude inventories are expected to build by +1.07mbbls for the week ending 7th October according to a survey, following on from a -1.35mbbls draw last week. The front month WTI- Brent spread spent much of last week around 6.5$/bbl as European demand feeds strong exports. Crude stocks unexpectedly rose in last week’s data with higher refinery utilisation, but data is expected to show lower rates this week with ongoing seasonal maintenance and outages. Refinery utilization is expected to fall by 0.46% this week down to 90.8%. Crude production has shown little signs of any significant increase with investor returns, increasing costs and supply chain issues limiting output.
• Gasoline and diesel exports are expected to remain strong and imports low despite a slight dip in gasoline exports last week. The tight European supplies due to falling Russian flows and with ongoing French refinery strikes are maintaining strong overseas demand.
• The expectation is for a refined products draw this week at -1.25mbbls for distillates and -1.32mbbsl for gasoline. Crack spreads remain elevated as refineries struggle to refill inventories with strong demand from Europe and due to seasonal refinery maintenance. The US 321 crack spread has risen from 27$/bbl on Sep 16 up to over 42$/bbl. The tight supplies are overriding concerns that weak economic growth, a US recession and high pump prices could reduce US diesel and gasoline demand. Gasoline and distillate demand recovered last week with 4-week product supplied moving back above 2020 levels but remains well below normal levels.
• The API data released last night showed a big build in crude stocks of +7.05Mbbls and a draw at Cushing of 0.75mbbls. Distillates inventories were reported down -4.56mbbls and gasoline up +2.01mbbls.