EIA Oil Stocks Preview: Crude Build and 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 expecting a draw of +1.78mbbls for the week ending 9th September according to a survey following on from an unexpected +8.8mbbls build last week. The unexpected large build last week was driven by a drop in exports and lower refinery runs. Crude production is expected to stay strong with the EIA drilling report showing an increase in shale oil output in both September and October. The WTI- Brent spread remains around 6.5$/bbl and continues to encourage healthy exports. Despite the crude export dip in recent weeks volumes remain well above normal.
• The SPR release is expected to continue until at least October with stocks falling to approximately 380mbbls. Recent reports have suggested either a continuation of the release beyond the current plan or a restocking of the storage depending on market price levels later in the year.
• The API data released last night showed a big build in crude of +6.0mbbls and a build at Cushing of +0.1mbbls and in distillates of +1.8mbbls but a draw in gasoline of -3.2mbbls.
• Refinery utilization is expected to dip slightly by another -0.17% as margins continue to fall although refinery outages have reduced with the return of the BP Whiting refinery. The US 321 crack spread is back down to 29$/bbl this week but was still around 32$/bbl in the week to Sep 9.
• Distillate inventories were still 23% below the 5-year average but confirmation of the build from last night’s API data would help. Gasoline stocks are 7% below normal with strong refined product exports limiting the potential to restock domestic supplies. A survey suggests gasoline inventories are expected to draw by -1.07mbbls and distillates to fall by just -0.09mbbls.
• The 4-week rolling implied gasoline demand data has so far shown no sign of recovery and still near 2020 levels. Data will be of interest this week for any boost from the Labor Day weekend. Distillate demand has been more robust over the summer, but last week’s data showed a fall to 10% below 2021 levels.