Oil Storage Report - Mar 9

[dan_s]

The U.S. Energy Information Administration said in its weekly report that crude oil inventories rose by 3.9 million barrels in the week ended March 4.

Market analysts' expected a crude-stock rise of 3.9 million barrels, while the American Petroleum Institute late Tuesday reported a supply gain of 4.4 million barrels.

Total U.S. crude oil inventories stood at an all-time high of 521.9 million barrels as of last week, underlining concerns over a domestic supply glut.

Supplies at Cushing, Oklahoma, the key delivery point for Nymex crude, rose by 690,000 barrels last week, the EIA said, raising fears that the nation's largest storage facility is nearing full capacity.

This why oil prices moved higher shortly after the report came out: The report also showed that gasoline inventories decreased by 4.5 million barrels, compared to expectations for a drop of 1.4 million barrels, while distillate stockpiles fell by 1.1 million barrels.


I do expect that crude oil storage levels will continue growing into the 2nd quarter as we are in the low point of the year for oil demand. In the 2nd quarter, refiners ramp up production of summer grade gasoline, which requires more crude oil. NGLs, primarily butane, cannot be blended with gasoline in the summer blends. The "fear" of storage filling is not a "reality". Keep in mind the U.S. is now importing almost half the crude oil it consumes and domestic production is falling. We have a total of ~640 million barrels of crude oil storage capacity.

[dan_s]

CRUDE OIL INVENTORY/’000 bbls
(Week Ended 3/4/16)

Current: 521,861
Actual Build/(Withdrawal): 3,880
Economist Average Estimate: 3,178
Previous: 517,981