Oil Inventory Reports
This week’s DOE report may be more important than many reports seen this year. Up until very recently, the weekly reports have more often than not played second fiddle to movements in equities and currencies. And, while those retain a certain importance, they are not enough to overwhelm major fundamental developments right now. How important this report will be remains to be seen. The most important figure this week will be crude oil stocks at Cushing, Oklahoma – already at record highs. Our next look will be at demand numbers. Last year, after the corresponding report, crude oil stocks were up 55.2 million bbls, or 17.93%. Gasoline stocks were down 4.9 million bbls, or 2.35%. And, distillate stocks were up 37.8 million bbls, or 34.18%.
DOE History
Distillate stocks have risen in seven of the last nine years, by an average of 1.098 mln bbls. The nine-year average is a build of 0.665 mln bbls. Gasoline stocks have increased in five of the last nine years, for a five-year average build of 1.940 mln bbls. The nine-year average was a build of 0.201 mln bbls. Crude oil stocks have been lower in five of the last nine years for a five-year draw of 3.919 mln bbls, giving us a nine-year average draw of 1.722 mln bbls. Utilization has been higher in five of the last nine years and has a nine-year average utilization figure of 92.70%. The five-year, pre-hurricane utilization average was 95.76%. Since Katrina, refineries have run at an average utilization rate of 88.88%. Crude oil imports have averaged 9.964 million bpd over the last six years. Traders will be looking extra closely at Cushing stocks, which ended last week at record highs.
Last Week’s Inventory Comparison
Distillate stocks are now 1.7 million bbls, or 1.13%, higher than a year ago. Heating oil inventories are 4.2 mln bbls, or 10.22%, higher than they were a year ago. Gasoline stocks are 11.9 mln bbls (up 5.67%) higher against a year ago. Crude oil stocks are now 4.1 million bbls, or 1.12%, lower than a year ago. Residual stocks are 9.1 mln bbls (24.80%) higher than a year ago, jet fuel stocks are 1.3 mln bbls, (3.04%) higher than a year ago. Utilization is 6.12% higher than a year ago and 4.00% below the nine-year average. It is 7.46% lower than the five-year, pre-Katrina average and 0.32% above 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 19.205 million bpd, up 0.280 mln bbls on the week, and up 0.871 mln bpd and 4.75% against a year ago, reportedly. Five weeks ago, it was 0.454 mln bpd and 2.44% higher than a year ago. Four-week gasoline demand is at 9.201 mln bpd, up 2.09%, compared to up 3.51% two weeks ago. It was down 15,000 bpd on the week. Four-week distillate demand is now at 3.867 mln bpd, up 12.35%, compared to up 0.41% five weeks ago. Four-week jet demand is now at 1.443 mln bpd, up 4.26% against a year ago, compared to down 3.99% three weeks ago. Four-week residual fuel demand is at 0.491 mln bpd, down 16.50%, compared to down 24.76% one week ago. Propane use is up 0.78% to 0.902 mln bpd, compared to 0.850 mln bpd (dn 8.50%) eight weeks ago. Distillate demand and total consumption have improved dramatically in recent weeks.
Last Week’s API Report
Last week’s API report showed a draw of 0.794 million barrels in crude oil stocks, a drawdown of 0.331 million barrels in distillate stocks, and a build of 0.981 million barrels in gasoline stocks. Refinery utilization was up 1.0% to 85.9%. Crude oil imports were up a striking 2.592 million bpd to 10.980 million bpd. Gasoline demand came in at 9.116 million bpd, while distillate demand came in at 4.476 million bpd.
This was a bullish report, with draws reported in both crude oil and distilklate inventories, both of which are forecast to increase. Gasoline stocks were higher, and expected lower, and refinery utilization was back up – with a stunning jump of 2.5 mln bpd in imports. These factors tempered the bullish impact of the first factors.
DOE Inventory Statistics for the report released May 19th
| Category | Final DOE Estimate
This Week’s Report | History
Last Year’s Report | Most Recent Changes
This Week’s DOE Report | Versus A Year Ago
Mln of Bbls |
| Distillate | up 0.50 to 1.00 mln bbls | up 0.248 | dn 1.000 mln bbls | up 1.700 |
| Gasoline | up 0.25 to 0.75 | dn 0.537 | dn 0.300 | up 11.900 |
| Crude oil | up 0.00 to 1.00 | dn 5.413 | up 0.200 | dn 4.100 |
| Utilization | dn 0.5% to 1.0% | up 3.3% at 85.1% | dn 0.48% at 87.94% |
|
| Crude Imports | up 0.000 to 0.500 mmbd | dn 0.013 to 8.778 | up 0.142 to 9.829 mln bpd |
|
| Distillate Demand | 4.086 mln bpd | up 196,000 | Gasoline Demand | 9.092 mln bpd | dn 048,000 |
| Distillate Production | 4.213 mln bpd | dn 081,000 | Gas Production | 9.231 mln bpd | up 269,000 |
| Distillate Imports | 0.183 mln bpd | dn 010,000 | Gasoline Imports | 0.836 mln bpd | dn 020,000 |
Open Interest
Analysis
Crude oil open interest fell by 29,044 contracts on Thursday, when prices were well lower. That looks like long liquidation, which would be supportive. Since May 14th, 140,511 (9.48%) contracts have been liquidated.
Heating oil open interest fell by 8,203 contracts on Thursday, when prices were lower. That looks like long liquidation and is supportive. Since May 14th, 11,307 contracts (3.53%) have been liquidated.
RBOB open interest grew by 1,840 contracts on Thursday, when prices were lower. That looks like fresh selling, which would be bearish. Liquidation cam early in May; since May 3rd, open interest is down 38,815 (12.55%).
Natural gas open interest fell by 7,444 contracts on Thursday, when prices were lower. That looks like long liquidation and is supportive.
Thursday’s Open Interest Changes:
Crude 1,341,592 dn 29,044 Heat 309,449 dn 8,203 RBOB 270,560up 1,840 Nat gas 858,858 dn 7,444
CFTC Commitments of Traders for Nymex (Forensic analysis for the period ended Tuesday, May 18th)
Crude oil prices dropped $6.96/bbl during the week ended May 18th, and the best selling came from Managed Money accounts, which liquidated 11,919 longs and added 33,109 new shorts , and from Producers, which liquidated 48,664 longs and covered 66,112 shorts. Swap Dealers were buying into the weakness, adding 12,949 new longs and covering 1,653 shorts. Other Reportables added 6,016 new longs and covered 13,478 shorts. Once again, funds were selling short rather aggressively. Producers were covering shorts.
In heating oil futures, prices dropped 17.86 cents a gallon, with the best selling coming from Managed Money accounts, which liquidated 3,295 longs and added 3,772 new shorts. Producers added 2,382 longs and covered 5,702 shorts. Swap Dealers added 2,544 new longs and covered 473 shorts. Other Reportables added 598 new longs and covered 54 shorts. Managed Money long liquidation and new selling pressed quotes lower in this reportable period.
Gasoline prices fell 15.21 cents a gallon during the week. Managed Money accounts liquidated 3,762 longs and added 1,267 new shorts. Swap Dealers added 966 longs and covered 362 shorts. Producers liquidated 6,024 longs and covered 11,270 shorts. Other Reportables added 2,106 longs and added 932 shorts.
In natural gas, prices rallied 21.1 cents during the period under review. The best buying came from Managed Money accounts, which added 5,676 longs and covered 10,547 shorts. Producers added 1,348 longs and 4,960 shorts. Swap Dealers liquidated 3,732 longs and added 327 shorts. Other Reportables liquidated 4,199 longs and added 4,564 shorts.
Once again, managed money accounts or funds were the best sellers, selling short and liquidating longs. In natural gas futures, managed money accounts were buying and covering shorts.