EIA Oil Stocks Preview: Crude Build and Small 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 +2.56mbbls for the week ending 16th September according to a survey, following on from a +2.4mbbls build last week. Production has remained steady in recent weeks while the WTI-Brent spread remains near 6.5$/bbl which should continue to encourage strong exports.
• The US 180mbbls SPR release is ongoing and now expected to continue into November up towards the start of the EU ban on Russian seaborne crude on Dec 5. So far 155mbbls have been released with the next planned sale to take the total up to 165mbbls.
• The API data released last night showed builds across the board with crude up +1.04mbbls, Cushing up +0.51mbbls, distillates up +1.54mbbls and gasoline up +3.23mbbls.
• Refining utilization recovered last week following the restart of BP’s Whiting facility but an increase in refinery outages and falling margins in the week to Sep 16 may limit any further recovery. The US 321 crack spread was down from 31.7$/bbl to 27$/bbl in the week. Refinery utilization is expected to remain relatively unchanged near 91.5% and up just 0.02% this week.
• Diesel cracks drifted lower after the big stock build and lower demand in last week’s data. Gasoline and distillate 4-week rolling implied demand fell below 2020 levels. The expectation is for small draws of -0.1mbbls in distillates and -0.5mbbsl in gasoline this week. Cracks spreads have recovered slightly in recent days on supply concerns, but confirmation of the build seen in API data overnight may suggest little recovery in demand and could push spreads back down. Gasoline and diesel exports are likely to stay strong but ship tracking data suggests a recovery in gasoline imports with higher flows from Europe during the week.