EIA US Stocks Preview: Small Builds 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 +1.21mbbls for the week ending 23rd September according to a survey, following on from a +1.14mbbls build last week. The WTI-Brent spread has fallen further in the week to 7.7$/bbl and should continue to encourage strong crude exports to Europe. Crude exports have been above the 5-year average for the last five weeks. US production shows little sign of increasing as supply chain issues, rising costs and capital discipline of drillers is limiting production increases.
• The API data released last night showed builds across the board with crude up +4.15mbbls, Cushing up +0.36mbbls, distillates up +0.44mbbls and gasoline up +1.05mbbls.
• Refinery utilization is expected to fall by 0.77% this week down to 92.8%. Unplanned refinery shutdowns and scheduled maintenance have driven higher outages during the second half of September. BP’ Toledo refinery in Ohio may be out of action until early next year due to fire damage. Refining margins have been falling since June due to weak demand but have steadied during this month and should provide some support to refinery runs. The US 321 crack spread was back over 30$/bbl last week and is still well above start of the year levels near 20$/bbl.
• The expectation is for small builds of +0.2mbbls in distillates and +0.3mbbsl in gasoline this week. Gasoline and distillate 4-week rolling implied demand fell again last week with both now well below 2020 levels. The market will be looking for signs of a recovery in demand data with economic concerns weighing on diesel cracks. Gasoline cracks have found more recent support with supplies especially low on the West Coast and Midwest. Strong overseas demand is likely to maintain high product exports therefore limiting the ability to refill the depleted domestic stocks.