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 expected to build by +1.32mbbls for the week ending 14th October according to a survey, following on from a big +9.88mbbls build last week. The front month WTI- Brent spread is widening and should help to support high exports despite the pullback last week. The spread has traded from around -6.5$/bbl to as wide as -8$/bbl over the last week. Crude production has shown little sign of any significant increase with investor returns, increasing costs and supply chain issues limiting output. Production has stayed near 12mbpd since mid-June. The latest EIA drilling estimates for October were this week revised lower by 114kbpd but are forecast to recover most of that decline during November.
• Data last week reported diesel stocks were 24% below the five-year average while gasoline stocks were 8% below normal. Strong demand from Europe is expected to help maintain diesel exports while ship tracking data suggests imports of gasoline have dipped recently. Global diesel supplies are tight, especially in Europe, due to refinery outages, French strikes and declining Russian flows. Diesel’s 4-week implied demand recovered last week to near normal levels after the fall in recent weeks, but gasoline’s 4-week average implied demand fell further due to Hurricane Ian disruption. The expectation is for a refined products draw this week of -1.49mbbls for distillates and -1.23mbbsl for gasoline.
• The US 321 crack spread has gradually rallied during October from 32$/bbl to 44$/bbl and should help to maintain strong refinery run rates subject to reductions due to outages. Last week refinery utilisation fell below 90% - the lowest since April due to seasonal refinery maintenance. Refinery outages are expected to be at a similar level this week. A survey suggests refinery utilization is expected to fall by another 0.23% this week down to 89.7%.
• The API data released last night showed a draw in crude stocks of -1.27mbbls and a build at Cushing of +0.9mbbls. Distillate inventories were reported down -1.09mbbls and gasoline also down -2-17mbbls.