Energy Prospectus

The U.S. Energy Information Administration said in its weekly report that crude oil inventories increased by 2.4 million barrels in the week ended March 2.

That compared with analysts' expectations for a gain of around 2.7 million barrels, while the American Petroleum Institute late Tuesday reported a supply-increase of 5.7 million barrels.

Supplies at Cushing, Oklahoma, the key delivery point for Nymex crude, declined by 605,000 barrels last week, the EIA said.

Total U.S. crude oil inventories stood at 425.9 million barrels as of last week, which the EIA considered to be in the lower half of the average range for this time of year.

U.S. crude oil production rose by 0.4% from the previous week to a fresh all-time high of 10.36 million barrels per day.

The report also showed that gasoline inventories decreased by 788,000 barrels, compared to expectations for a decline of 1.2 million barrels. For distillate inventories including diesel, the EIA reported a drop of 559,000 barrels.
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Crude oil inventories remain well below a 30 day supply. This is the time of year when crude oil inventories MUST BUILD, so refiners have enough feedstock to make the gasoline and diesel this country needs. Transportation fuel demand increases by over 2,000,000 barrels per day from Q1 to Q2.

Note from John Kemp at Reuters:
"U.S. commercial inventories of crude oil are only up ~3 million barrels since January 1st. This compares to +48 MMBbls in 2017 and +26 MMBbls for the 10 year average." So what happens when refiners come out of maintenance season and demand for crude oil spikes?"

In 2017, refinery throughput increase by over 2.0 MMBbls per day from February to April and refiners stayed near 95% capacity until Hurricane Harvey arrived.

This year, inventories of gasoline, diesel and jet fuel are much lower than they were a year ago.

REMEMBER THIS FACT: Every oil price cycle we've every had, overshot the mark causing shortages and higher oil price. I doubt that it is different this time.

From Raymond James:

This week's petroleum inventories update was bullish relative to consensus. ''Big Three'' inventories (crude - including SPR, gasoline, distillates) rose by 1.2 MMBbls, versus consensus estimates for a build of 3.5 MMBbls and the normal seasonal build of 1.3 MMBbls. Total crude inventories rose by 2.6 MMBbls, versus consensus calling for a build of 3.0 MMBbls - with commercial crude rising 2.4 MMBbls and the SPR up 0.2 MMBbls. Cushing crude inventories fell once again, this time by 0.6 MMBbls, while Gulf Coast inventories rose 2.6 MMBbls. Gasoline posted a draw of 0.8 MMBbls versus consensus calling for a build of 1.5 MMBbls, while the distillate draw of 0.6 MMBbls was smaller than consensus (draw of 1.0 MMBbls). Total petroleum inventories were unchanged for the week.

As always, regardless of their week-to-week movements, U.S. inventories do not constitute a holistic picture of global (or even total OECD) inventories, but they represent the only ''real-time'' data source.

Refinery utilization edged up to 88.0% from 87.8% last week.

Total petroleum imports were 10.6 MMBbls per day, up from last week's 9.1 MMBbls per day.

Total petroleum product demand increased 3.0% after last week's 2.9% decrease. On a four-week moving average basis, there is a 3.4% y/y increase in total demand. Lower 48 production is estimated at 9,852 MBbls per day, up 80 MBbls per day from last week, and 1,291 MBbls per day above year-ago levels. As always, weekly demand and supply figures are provisional estimates subject to frequent revisions.