EIA US Oil Stocks Preview:  Refinery Runs Expected to Recover

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 by -0.72mbbls for the week ending 6th January according to a Bloomberg survey, following a build of 1.69mbbls last week. Crude exports rose back above 4mbpd again last week but could dip this week with companies no longer trying to avoid holding product in storage to limit Gulf Coast tax. The Brent-WTI spread is holding at around -4.9$/bbl to help maintain strong demand from Europe. US crude production is expected to remain steady versus last week’s report when it came in at 12.1mbpd.
• The US SPR drawdown speed slowed to just 780kbbls in last week’s report taking the total reserves to 371.6mbbls. SPR withdrawals are now expected to be limited with congress-mandated SPR sales of 26mbbls in FY 2023 to the end of September. The US DOE this week turned down the first bids from oil companies to resupply small volumes of oil back into the nations SPR in February.
• Refinery utilization is expected to recover back up 4% this week after falling 12.4% last week. Refinery utilisation collapsed last week due to Gulf Coast outages caused by the winter freeze late in December. Refiners have gradually resumed operations since the start of the year with outages expected back near the pre disruption levels next week.
• Gasoline and diesel stocks are expected to show draws with gasoline down -0.14mbbls and distillate down -0.48mbbls. Weak demand continues to weigh on product crack spreads to offset upside from supply concerns. US gasoline demand last week fell by the most since March 2020 and distillate demand fell by the most since May 2020. Stock levels could be impacted with refinery outages still high despite a recovery expected during the week. Diesel exports are likely to remain high with strong demand from Europe ahead of the EU ban on Russian products from 5 Feb.
• The API data released last night showed a large build in crude stocks of +14.9mbbls with +2.3mbbls at Cushing. Gasoline inventories showed a build of +1.8mbbls and a distillate build of 1.1mbbls.