EIA Inventory Preview: Refined Products of Interest

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

• The EIA data is expected to show a 2.05mbbl draw in crude inventories for the week ended Fri 20th May. A draw in crude would be supplemented by expected further SPR withdrawals as the US aims to release 1mbpd from strategic reserves.
• A narrowing of the WTI-Brent spread has so far not reduced the high US crude export amounts. The spread was again closer last week with an average of just -2.29$/bbl compared to -4 earlier this month so could start to show in the export volumes. Overseas demand for US crude has kept exports at the top of the 5-year range and kept total oil exports above imports for 10 straight weeks.
• Crude imports recovered last week largely due to an increase in flows from Canada after field maintenance. Production is not yet seeing an increase as well completions are not keeping up with the ever-increasing rig counts due to supply chain shortages and cost increases.
• Implied demand for gasoline and distillate has been resilient despite record pump prices and US demand is expected to increase further during the summer driving season. Refined product stocks are still low, especially on the East Coast where distillate stocks are still 38% below the bottom of the 5-year range despite a 1.1mbbls build last week. This week gasoline is expected to draw by -1.3mbbls which would likely put renewed upward pressure on gasoline prices. Distillate inventories are expected to build by 0.66mbbls. Gasoline imports to East Coast from Europe have increased but exports to Mexico from the Gulf Coast have also increased as the Colonial Pipeline is already running at full capacity and cannot send more East.
• Refinery utilization is expected to increase by 0.66% as refiners attempt to maximise run rates with margins still high despite a pullback in crack spreads over the last week. East coast refinery utilization was 95% last week helping to ease tight market supplies. The 321 crack spread is trading down 11$ from the peak but still high at 45.55$/bbl.
• The API data released last night showed a build in crude of 0.57mbbls and draws of -4.2mbbl in gasoline and -0.95mbbls in distillates.
• The WTI-Brent spread has moved back out to -3.7$/bbl in recent days but the API data showed a -0.7mbbl draw at Cushing last night which if repeated by EIA could put upward pressure back on the spread.