US Weekly Petroleum Status Report - Capital Economics
Energy

US Weekly Petroleum Status Report

Energy Data Response
Written by Samuel Burman
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US commercial crude stocks plunged last week owing primarily to a rebound in exports. Next week, inventories could rise as the deep freeze in the southern parts of the US has knocked out several million bpd of refinery activity, which will probably take much longer to come back online than production.

Deep freeze could boost crude stocks next week

  • US commercial crude stocks plunged last week owing primarily to a rebound in exports. Next week, inventories could rise as the deep freeze in the southern parts of the US has knocked out several million bpd of refinery activity, which will probably take much longer to come back online than production.
  • The EIA’s weekly US Petroleum Report, released earlier today, estimates that crude oil in commercial storage declined by 7.3m barrels last week. This was larger than the 5.8m barrel draw reported by the American Petroleum Institute (API) on Tuesday and was also much bigger than the 2.4m barrel fall expected by analysts surveyed by Reuters. Stocks are now a touch below their five-year average. (See Chart 1.)
  • The main factor behind the plunge in crude stocks was the 1.2m bpd w/w drop in net imports (see Chart 2), primarily resulting from the sharp rebound in exports. The increase in exports more than reversed last week’s huge decline and probably reflects ongoing strength in demand from Asia. Meanwhile, the 200,000 bpd decline in production, in large part due to the cold weather, also weighed on crude stocks. Output will fall further in the coming weeks, but it should recover quickly providing that temperatures increase.
  • Elsewhere, implied product demand rose by almost 500,000 bpd to around 20.7m bpd (see Chart 3) as the recent easing of virus containment measures boosted travel activity. That said, gasoline stocks edged higher (see Chart 4) on the back of an increase in refinery throughput. Nevertheless, gasoline stocks will probably decline soon as the recent cold weather has forced almost a third of US refinery capacity offline.
  • Oil prices rose a touch on the publication of the EIA’s latest report, reflecting the slightly bigger-than expected draw in stocks. Regardless of the weather, we think that prices will continue to rise. (See here.)

Chart 1: US Commercial Crude Stocks (Mn. Barrels)

Chart 2: Weekly Change in Net Imports & Commercial Crude Stocks (Mn. Barrels)

Chart 3: Implied Product Demand (Mn. BpD)

Chart 4: Gasoline & Distillate Stocks (Mn. Barrels)

Sources: EIA, Capital Economics


Samuel Burman, Assistant Commodities Economist, samuel.burman@capitaleconomics.com