EIA Stocks Preview: Small Crude and Distillate Draw Expected

EIA Oil Inventory Preview: The EIA weekly petroleum status report will be released at 10:30 ET (15:30 GMT) today

• Crude inventories are expected to draw -1.24mbbls for the week ending 11th November according to a survey, following a build of +3.9mbbls last week. Crude exports bounced back last week with the wide WTI-Brent spread still supporting strong overseas demand. The WTI-Brent spread has drifted out to -8$/bbl over the last week. Crude production increased back above 12mbpd last week after a slight dip in recent weeks. The latest EIA drilling report forecasts US shale oil output to increase slightly from 9.1mbpd in November to 9.19mbpd in December.
• The end of the seasonal maintenance period has seen refinery utilisation recover from below 89% up to 92.1% last week. A survey suggests refinery utilization is expected to increase again this week by 0.26% to 92.3%. Refineries in all regions were last week operating above 90% capacity with the exception of the Rocky Mountains. Utilisation is supported by the US 321 crack spread holding steady around 35$/bbl this week compared to start of year levels of approximately 20$/bbl.
• The IEA monthly report earlier this week highlighted the exceptionally tight diesel supplies with limited refining capacity and global stocks at an 18 year low. Stocks are especially low on the US East Coast with distillate supplies in PADD1 45% below the five-year average last week. High refinery utilisation has not been enough to restock supplies, with distillate demand up near the top of the five-year range. The Colonial pipeline is flowing at full capacity but at least 11 vessels carrying 3.6mbbls of distillate are due into New York Harbour in the coming few weeks.
• Gasoline inventories fell to the lowest since 2012 last week despite week demand and instead driven by strong refined product exports. Europe is still looking for alternative oil supplies ahead of the EU ban on Russian crude in Dec and oil products in Feb. The expectation is for gasoline stocks to remain largely unchanged with a build of +0.06 and distillates stocks to show a -0.64mbbl draw.
• The API data released last night showed a draw in crude stocks of -5.8mbbls and a draw at Cushing of -0.8mbbls. Gasoline inventories showed a build of +1.7mbbls and distillate inventories reported a draw of +0.9mbbls.