US Oil Stocks Preview: Crude and Cushing Could Continue Draws

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

• Crude inventories are expected to draw by -1.99mbbls for the week ending 8 Sep according to a Bloomberg survey. Crude and Cushing stocks last week continued the declining trend seen in July and August driven by high exports back above 4.9mbpd and despite a small rise in imports. Crude production remained unchanged at the high of the year. The US SPR rose by 300kbbl last week and has now received 3.9mbbl of a total of 6.3m bought for delivery in August and September. Stocks at Cushing are expected to fall again this week with AlphaBBL expecting a draw of -2.59mbbls which would take stocks to the lowest since mid December.
• US refinery utilisation is expected to decline again by -0.52% after falling back to 93.1% last week. An outage to the FFC unit at the Galveston Bay refinery late last week following a fire could impact runs this week. Two key refineries outages on the US East Coast from mid-September for six to eight weeks could tighten distillates supplies from the already low inventory level ahead of the winter. Midwest refinery runs last week continued to run at above nameplate capacity with refinery prioritising the higher margin diesel production over gasoline. The US 321 front month crack spread last week regained ground back up to around 34/bbl.
• Total US gasoline stocks are expected to show a draw of -0.54mbbls and distillates are expected to build by +0.61mbbls according to a Bloomberg survey. Low US refined product inventories continue to provide support to cracks with a limited boost expected during the refinery maintenance period in Sep and Oct. Last week gasoline stocks drew and distillates showed a small build with a drop in gasoline production. Weekly gasoline arrivals in the US from Europe fell by around 25% in the week to 7 Sep to the lowest since July according to Bloomberg.
• Gasoline demand is showing signs of weakness at the end of the summer driving season with a drop of 3.9% last week according to GasBuddy data. The OPIS US gasoline volume survey also suggests a demand slump for last week. EIA implied gasoline demand showed a small increase last week but the four week average remains near the lower end of the five year range. Distillate four week implied demand from EIA also showed a small increase last week.
• The API data released last night showed a crude build of +1.2mbbls with a draw of -2.4mbbls at Cushing. Gasoline inventories showed a build of +4.2mbbls and distillates a build of +2.6mbbls.