US commercial crude stocks soared again last week as refinery throughput remained well below normal levels. Given that production has almost entirely recovered, stocks will probably rise further next week.
Refinery throughput to revive further in coming weeks
- US commercial crude stocks soared again last week as refinery throughput remained well below normal levels. Given that production has almost entirely recovered, stocks will probably rise further next week.
- The EIA’s weekly US Petroleum Report, released earlier today, estimates that crude oil in commercial storage leapt by 13.8m barrels last week. This was much higher than the Reuters’ consensus of a 0.8m barrel build, but similar to the 12.5m increase reported by the American Petroleum Institute (API) yesterday.
- Once again, the primary driver of the climb in crude stocks was the low level of crude oil inputs to refineries as a result of refineries being offline for maintenance and repair after freezing weather last month. Although inputs rose by 2.4m bpd w/w, they are still well below last year’s levels. (See Chart 1.) This, in combination with a 900,000 bpd jump in crude oil output (see Chart 2), pushed crude stocks significantly higher. That said, we doubt that production will increase by much more in the coming weeks, as most of the weather-related drop has now been recuperated.
- Unsurprisingly, gasoline and distillate stocks sank (see Chart 3), and are now further below their respective five-year averages. As refinery activity continues to recover in the weeks ahead, the downward pressure on product stocks should ease. Meanwhile, implied product demand was relatively unchanged, though gasoline demand rose by around 600,000 bpd (see Chart 4) to levels not seen since November. What’s more, we suspect that the rollout of the $1.9trn stimulus will boost gasoline demand in the coming months.
- Oil prices fell a little after the publication of the EIA stocks report, probably because the reported crude build was larger than the already-high API estimate.
Chart 1: Crude Oil Inputs to Refineries (Mn. BpD)
Chart 2: Crude Oil Production (Mn. BpD)
Chart 3: Gasoline & Distillate Stocks (Mn. Barrels)
Chart 4: Change in Implied Product Demand (Mn. BpD)
Sources: EIA, Capital Economics
James O’Rourke, Commodities Economist, +44 (0)20 3927 9834, email@example.com