EIA Oil Stocks Preview: Refinery Recovery Expected to Continue

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

• Crude inventories are expected to draw by -1.32mbbls for the week ending 13th January according to a Bloomberg survey, following a big build of 18.96mbbls last week. Low refinery utilisation, a big fall in exports to the lowest since August and slightly higher production led to the big build last week. The Brent-WTI spread ended last week at around -5.3$/bbl while high European demand should encourage strong exports. Export levels could remain below levels late last year with companies no longer driven to reduce year-end stock levels. Cushing stocks could continue to increase with Midwest refinery runs still recovering although stocks last week were still 36% below the five-year average.
• The US SPR drawdown has halted with total reserves at 371.6mbbls following the completion of the planned 180mbbls withdrawal last year. SPR changes are now expected to be limited in the coming months with potential restocking if prices decline to around 70$/bbl. The US still has congress-mandated SPR sales of 26mbbls planned for FY 2023 to the end of September.
• Refinery utilization is expected to continue its recovery following recent declines due to severe weather at the end of December. Utilisation is expected to increase 2.8% this week but that is still about 5% below the levels seen before the winter disruption.
• Gasoline stocks are expected to show a build of +1.78mbbls and distillates a draw of -0.34mbbls. A small increase in distillates demand last week halted the previous downward trend but the four-week gasoline demand average continued to decline. The implied demand of both gasoline and distillates remains weak and is limiting the upside in crack spreads despite concerns for supplies following the EU ban on Russian products from 5 Feb. The slow return of refineries from outage could again limit both distillate and gasoline exports this week.
• The API data released last night showed a large build in crude stocks of +7.6mbbls with +3.7mbbls at Cushing. Gasoline inventories showed a build of +2.8mbbls and distillates a draw of -1.8mbbls.