Oil Inventory Reports

  We have had nine consecutive builds in crude oil stocks, and it looks like the odds are in favor of there being another build in this week’s report.  Six out of the last eight years have generated stock builds for this same week.  And, after last week’s unexpectedly strong increase in refinery utilization (of 1.5%, to 82.60%), we enter this week with a similarly strong chance of there being another increase in utilization this week.  Seven out of the last eight years (this corresponding week) have shown utilization increases.  The average increase over the last eight years has come out to a gain of 1.46%.

DOE History:  Distillate stocks have dropped in five out of the past eight years, by an average of 3.106 mln bbls.  The eight-year average is a draw of 1.616 mln bbls.  Gasoline stocks fell in five of the last eight years, for a five-year average draw of 3.360 mln bbls.   The eight-year average was a draw of 1.700 mln bbls.  Crude oil stocks have been higher in six of the last eight years for a six-year average build of 2.667 mln bbls and an eight-year average build of 1.288 mln bbls.  Utilization has been higher in seven of the last eight years and has an eight-year average increase of 1.46%, with an eight-year average utilization figure of 88.74%.  The four-year, pre-hurricane utilization average was 92.78%.  Since Katrina, refineries have run at an average utilization rate of 84.70%.  Crude oil imports have been lower in five of the last six years, and the average crude oil import figure over the last six years has fallen by 115,000 bpd.  The average crude oil import figure over the last six years has been 9.768 million bpd.  Imports were 0.708 mln bpd below that figure in last week’s report.   

Last Week’s Inventory Comparison:  Distillate stocks are now 0.5 million bbls, or 0.35%, higher than a year ago.  Heating oil inventories are 4.9 mln bbls, or 13.32%, higher than they were a year ago.  Gasoline stocks are 8.4 mln bbls (up 3.88%) higher against a year ago.  Crude oil stocks are now 9.5 million bbls, or 2.61%, lower than a year ago.  Residual stocks are 0.9 mln bbls (2.31%) lower than a year ago, jet fuel stocks are 0.2 mln bbls, (0.48%) higher than a year ago.  Utilization is 0.90% higher than a year ago and 4.68% below the eight-year average.  It is 7.70% lower than the four-year, pre-Katrina average and 1.65% below the average of the four years since the big hurricanes (Katrina & Rita) in 2005.

Last Week’s Demand:  Four-week, total refined products demand came in at 19.211 million bpd, down 0.149 mln bbls on the week, and up 0.535 mln bpd and 2.86% against a year ago, reportedly.  Seven weeks ago, it was 0.159 mln bpd and 0.83% lower than a year ago.  Four-week gasoline demand is at 8.997 mln bpd, up 1.53%, compared to down 1.26% six weeks ago.  It was up 44,000 bpd on the week.  Four-week distillate demand is now at 3.716 mln bpd, down 0.96%, compared to down 9.08% eight weeks ago.  Four-week jet demand is now at 1.369 mln bpd, down 4.26% against a year ago, compared to up 8.17% 12 weeks ago.  Four-week residual fuel demand is at 0.593 mln bpd, down 0.34%, compared to up 25.96% three weeks ago.   Propane use is down 1.02% to 1.166 mln bpd, compared to 1.330 mln bpd (up 7.34%) a week ago.  These numbers were mixed in comparison with a week ago.   

Last Week’s API Report:  This week’s API report showed a mild build of 0.421 mln bbls in crude oil stocks, a lighter-than-forecast draw of 1.007 mln bbls in distillate stocks and a smaller-than-expected draw of 0.946 mln bbls in gasoline inventories.  Utilization was up 1.3% to 82.1%.  Implied demand came in at a respectable 9.569 mln bpd in gasoline (after two strong weeks) and at 4.061 mln bpd in distillate.  Crude oil imports dropped 279,000 bpd to 9.203 mln bpd.  This week’s figures fell short of expectations everywhere, except for utilization.

DOE Weekly Inventory Statistics

Source: US Department of Energy’s Energy Information Administration

Open Interest Analysis

Crude oil open interest grew by 26,482 contracts on Wednesday, when prices were up.  That looks like heavy, new buying and it suggests that the big funds are back on the buy side. 

Heating oil open interest fell by 42376 contracts on Wednesday, when prices were higher.  That looks like short-covering and would be bearish. 

RBOB open interest grew by 5,287 contracts on Wednesday, when prices were higher, which looks like net new buying, which would be bullish.  Since March 1st , open interest is up 56,647 contracts.

Natural gas open interest grew by 15,248 on Wednesday, when prices were lower.  That looks like heavy new selling, although it could have been scaled-down buying, which we saw earlier in the week. 

Wednesday’s Open Interest Changes:

Crude 1,310,328  up 26,482 Heat 318,876  dn 423 RBOB 318,414 up 5,287Nat gas 830,935 up 15,595       







CFTC Commitments of Traders for Nymex (Forensic analysis for the period ended Tuesday, March 30th)

Crude oil prices rallied $0.46/bbl over the latest reporting period, and the only net buying came from Managed Money accounts, which added 9,483 new longs and covered 2,420 old shorts.  Swap Dealers (added 1,833 longs) and Producers (added 1,660 longs) both added longs, but they both sold substantially more, adding 5,196 new shorts and 5,213 new shorts, respectively.  Other Reportables liquidated 1,219 longs and added 5,449 new shorts.  Managed Money accounts hold 4.98 longs for every short, while Swap Dealers hold 1.68 longs for each short.  Producers hold 2.38 shorts for each long.  Other Reportables hold 1.77 shorts for every long.  Swap Dealers have been on the sell side lately, and funds have pushed quotes up.

In heating oil futures, prices gained 2.29 cents a gallon and, while there was short-covering from other sources, the best net buying came from Managed Money accounts, which added 3,521 longs and covered 3,187 shorts.  Other Reportables covered 930 shorts and liquidated 168 longs, and Producers covered 4,505 shorts while liquidating 10,974 longs.  Swap Dealers liquidated 3,345 longs and added 98 new shorts.  It was Managed Money buying and short-covering that pressed prices up.

Gasoline prices rose 1.19 cents a gallon during the period under review.  Here, it was Swap Dealer buying and short-covering (added 457 longs and covered 180 shorts) and Producers covered more shorts (4,233 shorts) against the liquidation of just 2,014 longs.  Other Reportables liquidated 774 longs and added 1,070 new shorts into the advance.

In natural gas, prices dropped 21.7 cents during the period under review.  This time, though, it was Swap Dealers and Other Reportables liquidating longs (8,615 and 5,554 respectively) against the covering of just 48 shorts (Swap Dealers) and 579 shorts by Other Reportables.  Producers added 5,942 longs and 3,398 shorts while Managed Money accounts took profits, adding 5,868 longs and covering 8,381 shorts.  They effectively got Swap Dealers and commission houses to throw in the towel on their long positions.  Managed Money accounts engineered the selling by the others, and were booking profits.    

Courtesy Peter Beutel