EIA Weekly Stocks Preview: More Stock Draws 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 by -1.11mbbls for the week ending 5 May according to a Bloomberg survey. Crude inventories were last week the lowest since 3 Feb with exports holding well above average and despite an unexpected decline in refinery utilistaion. Exports so far have not dropped as potentially expected with the narrower WTI-Brent spread compared to levels seen in Q1. Oil exports to Europe appear supported this month with the return of French refineries from the strike outages which ended in mid-April. Cushing stocks showed a small build last week but remain near the lower end of the five-year range. The WTI-Brent spread has been holding around -3.8$/bbl this month. AlphaBBL is expecting Cushing stocks to remain relatively unchanged with a small build of +20kbbls.
• The data was still showing a large positive adjustment last week suggesting an overestimation of crude exports and underestimation domestic production according to Kpler.
• Refinery utilisation is expected to resume the trend higher after the dip last week with a Bloomberg survey suggesting an increase of +0.66% to 91.4%. The beginning of the Beaumont expansion added 250kbpd of refining capacity to the US system. Refiners are potentially using less crude and more feedstocks like fuel oil to make products with pressure from lower margins. They processed the most non-crude feedstock since Oct 2021 in the last two weeks.
• Gasoline stocks are expected to show a draw of -1.01mbbls and distillates a draw of -0.82mbbls according to a Bloomberg survey. Diesel and gasoline inventories remain low with little sign of a recovery despite increasing refinery runs in the last couple of months. Implied demand was at the low end of the five-year range last week (excluding 2020) with a decline in gasoline demand reversing some of the previous gains. Demand is not yet seeing the normal seasonal boost heading into the US summer driving season as GasBuddy data suggests a drop in gasoline demand by -0.7% last week. US Gulf Coast diesel exporters have more than tripled diesel supplies to Europe so far this month according to Kpler due to the open transatlantic arbitrage aided by cheap freight.
• The API data released last night showed a build in crude stocks of +3.62mbbls but a -1.32mbbls draw at Cushing. Gasoline inventories showed a build of +0.4mbbls and distillates a big draw of -3.9mbbls.