Energy Prospectus

NEW YORK (Reuters) - U.S. crude stocks fell last week as refineries hiked output because they restarted following Hurricane Harvey, while gasoline stocks increased and distillate inventories fell, the Energy Information Administration said on Wednesday. < Keep in mind that much of what EIA reports each week are "SWAG" based on flawed formulas

Crude inventories fell by 1.8 million barrels in the week ending Sept. 22, compared with analysts' expectations for an increase of 3.4 million barrels. < Caused by lower imports and higher exports

Refinery crude runs rose by 1 million barrels per day, EIA data showed. Refinery utilization rates rose by 5.4 percentage points. < Bouncing back from Hurricane Harvey

Gasoline stocks rose by 1.1 million barrels, compared with analysts' expectations in a Reuters poll for a 921,000-barrel drop.

Distillate stockpiles, which include diesel and heating oil, fell by 814,000 barrels, versus expectations for a 2.2 million-barrel drop, the EIA data showed.

U.S. crude imports fell last week by 504,000 barrels per day.
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My Take:
Lower imports probably the result of Hurricane Maria (tankers will not sail into troubled waters), but better Brent oil price may take a few more tanker loads to Europe.
Refiners have a lot of work to do to rebuild U.S. gasoline and distillate stockpiles
There are concerns in the European market that winter is coming and distillate inventories (heating oil) are too low
There is strong demand for U.S. refined products

Comments below from Zacks Research Blog:

The energy sector has been leading this month with Brent oil and U.S. crude hitting the highest level since July 2015 and since April, respectively. This is primarily true as the historic output cut deal wherein OPEC, Russia and other producers agreed to curb production by 1.8 million barrels per day until next March, is now paying off with the global oil market on its way for balancing.

The output curbs are leading to falling inventories, which will soon drop to their five-year average given a robust demand outlook and reduced supplies. Improving global growth, especially in emerging economies and Eurozone, is raising demand for energy, and the damage to U.S. shale output in the wake of Hurricane Harvey is pushing up oil prices.

The OPEC sees signs of a tighter global market and thus raised global demand outlook for this year and the next. The International Energy Agency (IEA) also projects this year’s global demand to climb the most in two years as global glut has started to shrink due to stronger-than-expected consumption in Europe and the United States as well as production decline in OPEC and non-OPEC countries. In fact, the OPEC oil output declined in August for the first time since March.

Additionally, Turkey threatened to cut oil supplies from northern Iraq to the global market in response to its referendum on independence, which Turkey does not recognize. If the boycott becomes successful, it would lead to 500,000 fewer barrels of crude oil per day flowing into the global market and would result in higher oil prices. Further, a weak dollar is adding to the strength.

The bullish trend is likely to continue at least in the short term. Given this, investors might want to tap the space with the top-performing energy stocks of this month. For them, we have highlighted five stocks that are poised to perform well heading into the final quarter, should oil prices rise or remain above $50 per barrel. JONE, WG, NE, TTI and CVE