Oil Storage Report - October 4

[dan_s]

After the market closed on 10/3 the API put out their estimates for the week ending 9/29/2017:

API thinks U.S. crude oil inventories fell by 4.08 million barrels last week
Gasoline supplies gained 4.91 million barrels and distillates declined by 584,000 barrels.

On Wednesday, the EIA will put out their estimates of what happened last week. Refiners will continue to draw hard on crude oil inventories to rebuild depleted gasoline and diesel inventories during the 4th quarter. Refiners will have to ramp up heating oil production in November.

Raymond James: "The net result of these sharp inventory reductions is that we now believe both the OECD and U.S. are “below normal” in terms of days of consumption (for OECD) and days of production (in the U.S.) For example, in June we addressed the question of normalized U.S. inventories and came to the conclusion that increases in U.S. production (and, to some extent, demand) currently imply a normalized crude inventory level of ~465 million Bbls. Domestic crude inventories had already fallen below this level before the Harvey dislocation, and we would expect them to drop below it once again once the post-Harvey refinery outages fully subside."

[dan_s]

EIA Estimates;
U.S. commercial crude oil inventories decreased by 6.0 million barrels from the previous week.
Total motor gasoline inventories increased 1.6 million barrels last week.
Distillate fuel inventories decreased by 2.6 million barrels last week.

Propane/propylene inventories decreased by 0.4 million barrels last week and are in the lower half of the average range.

Total commercial petroleum inventories decreased by 6.1 million barrels last week.

[dan_s]

It will be the end of October before U.S. refineries fully recover from Hurricane Harvey. Once U.S. refineries are operating at 95% capacity we are going to see big draws from crude oil storage. - Dan

From EIA:
U.S. crude oil refinery inputs averaged over 16.0 million barrels per day during the week ending September 29, 2017, 145,000 barrels per day less than the previous week’s average. Refineries operated at 88.1% of their operable capacity last week. Gasoline production remained virtually unchanged last week, averaging about 9.9 million barrels per day. Distillate fuel production increased last week, averaging over 4.9 million barrels per day.
U.S. crude oil imports averaged over 7.2 million barrels per day last week, down by 213,000 barrels per day from the previous week. Over the last four weeks, crude oil imports averaged over 7.1 million barrels per day, 10.7% below the same four-week period last year. Total motor gasoline imports (including both finished gasoline and gasoline blending components) last week averaged 862,000 barrels per day. Distillate fuel imports averaged 72,000 barrels per day last week.

[k1f]

<<Once U.S. refineries are operating at 95% capacity we are going to see big draws from crude oil storage. >>

If <<Refineries operated at 88.1% of their operable capacity last week,>> is a further 7% going to produce "big draws"?

[dan_s]

Yes. U.S. refining capacity is ~18.6 million barrels per day. Do the math.

[dan_s]

U.S. crude oil exports are approaching 2 million barrels per day; more than double where they were before Hurricane Harvey.

U.S. producers are taking advantage of the big price gap between Brent and WTI. There is strong demand for light oil in Europe and Asia.