Energy Prospectus

Summary of Weekly Petroleum Data for the week ending January 29, 2021

U.S. crude oil refinery inputs averaged 14.6 million barrels per day during the week ending January 29, 2021 which was 80,000 barrels per day less than the previous week’s average.
Refineries operated at 82.3% of their operable capacity last week.
Gasoline production decreased last week, averaging 8.4 million barrels per day.
Distillate fuel production increased last week, averaging 4.6 million barrels per day. < Distillate fuel demand is now back to pre-pandemic level.

U.S. crude oil imports averaged 6.5 million barrels per day last week, increased by 1.4 million barrels per day from the previous week. Over the past four weeks, crude oil imports averaged
about 6.0 million barrels per day, 9.2% less than the same four-week period last year.
Total motor gasoline imports (including both finished gasoline and gasoline blending components) last week averaged 568,000 barrels per day, and distillate fuel imports averaged 518,000 barrels per day.

> U.S. commercial crude oil inventories (excluding those in the Strategic Petroleum Reserve) decreased by 1.0 million barrels from the previous week. At 475.7 million barrels, U.S. crude oil inventories are about 4% above the five year average for this time of year. < Crude oil inventories normally rise this time of year, to build feed stock for refiners that must ramp up transportation fuel production in Q2.
> Total motor gasoline inventories increased by 4.5 million barrels last week and are about 1% below the five year average for this time of year. Finished gasoline inventories decreased while blending components inventories increased last week.
> Distillate fuel inventories were virtually unchanged last week and are about 8% above the five year average for this time of year.
> Propane/propylene inventories decreased by 1.6 million barrels last week and are about 6% below the five year average for this time of year. < Bullish for NGL prices.
>> Total commercial petroleum inventories increased by 2.9 million barrels last week.

Total products supplied over the last four-week period averaged 19.4 million barrels a day, down by 4.3% from the same period last year.
Over the past four weeks, motor gasoline product supplied averaged 7.8 million barrels a day, down by 10.6% from the same period last year.
Distillate fuel product supplied averaged 4.0 million barrels a day over the past four weeks, up by 1.5% from the same period last year.
Jet fuel product supplied was down 31.2% compared with the same four-week period last year.

One of yesterday’s biggest developments was the leak of an internal OPEC document. Per a copy obtained by Reuters, the oil cartel found compliance with last month’s production cuts was 99%, leading OPEC to forecast that the oil market will be in a 2M b/d deficit by May. In other words, the intentional reduction in supply of oil is working as expected, with the market expected to be balanced in the coming months.

While the group did cut its forecast for demand by 300k b/d, the positive news on the supply front was the far more significant development for traders.

Aegis Comments:
"EIA reported a draw of -994 MBbls in U.S. crude-oil inventories for the week ending 1/29/2021. This was larger than the average estimate of -971 MBbls as reported by Bloomberg.
Inventories for the US are now at a surplus of 44.005 MBbls to last year and a surplus of 23.25 MBbls to the five-year average."

If U.S. crude oil inventories just remain flat, they will be back to or below the 5-year average by the end of Q1 because the 5-year average goes up in February and March. Days of Supply will be the big driver of oil prices as long as the Covid vaccines keep working.