EIA Oil Stocks Preview: Focus Still on Product Demand

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 small draw of 107kbbls for the week ending 12th August following on from a build of 10mbbls over the last 2 weeks. The WTI-Brent spread has slowly closed but remains at -6.15$/bbl and should be wide enough to support crude exports despite the large unexpected fall last week. Oil production is slowly increasing with EIA expecting shale output to rise by 136k in August and a further 141kbpd in September.
• The API data released last night showed a draw in crude of -0.45mbbls, a build at Cushing of +0.25mbbls, a draw in distillates of -0.76mbbl and a draw in gasoline of -4.48mbbl.
• Gasoline last week saw a big draw in stocks on the back of strong exports and despite a recovery in refinery utilization. Gasoline stocks in Central Atlantic are at their lowest since 2012 with less imports coming from Europe. Last week distillate exports fell, and production increased to help stocks build but that did little to dent the low levels which are 12% below the 5-year range. A survey suggests gasoline inventories are expected to draw by -0.81mbbls and distillates to build by +1.09mbbls.
• Gasoline implied demand last week recovered a little ground from a fall in recent weeks and could recover further with lower US pump prices and other views of more resilient demand. The large draw in API gasoline stocks last night could also suggest a recovery in gasoline demand. US pump prices continued to fall last week with average retail gasoline now down to 3.91$/gal.
• Refinery utilisation recovered last week with East Coast refiners operating at a record 100.4% capacity. Refiners are expected to keep runs high with margins picking back up despite a dip in the first week of August. The US 321 crack has recovered from 35.1$/bbl to 43.6$/bbl over the last week and compares to just 20$/bbl at the start of the year.