Oil Inventory Reports

  This week’s DOE report will be very instructive.  The signals it is giving are divided down a line, with supply factors, like inventory figures, falling on the bearish side, while demand factors are steadily improving, it seems.  Inventories still are well above previous years, and they are higher than multi-year averages.  But, over the last four or five weeks, demand has really come into its own, and it is now well above year-ago levels.     

   There was a small decline of 300,000 bbls at Cushing last week, pushing the total figure down to 37.6 million bbls.  That is, though, still quite high. Last year, after the corresponding report, crude oil stocks were up 61.7 million bbls, or 20.28%.  Gasoline stocks were down 4.5 million bbls, or 2.17%.  And, distillate stocks were up 37.9 million bbls, or 33.81%. 

    We are in the process of unpacking (and finding) a good deal of information and history.  We only have the last five years available, right this minute.

DOE History

Distillate stocks have risen in five of the last five years, by an average of 1.667 mln bbls.  Gasoline stocks have increased in four of the last five years, for a four-year average build of 2.134 mln bbls.   The five-year average was a build of 1.664 mln bbls.  Crude oil stocks have been higher in four of the last five years for a four-year increase of 1.492 mln bbls, and a five-year average build of 0.233 mln bbls.  Utilization has been higher in four of the last five years and has a five-year average utilization figure of 90.63%.  Since Katrina, refineries have run at an average utilization rate of 89.24%, this week, which is one of the better weeks in the year.  We will try to return to our former system of comparison, soon. 

Last Week’s Inventory Comparison

Distillate stocks are now 0.2 million bbls, or 0.13%, lower than a year ago.  Heating oil inventories are 3.0 mln bbls, or 7.18%, higher than they were a year ago.  Gasoline stocks are 13.2 mln bbls (up 6.33%) higher against a year ago.  Crude oil stocks are now 0.2 million bbls, or 0.05%, higher than a year ago.  Residual stocks are 9.5 mln bbls (25.33%) higher than a year ago, jet fuel stocks are 1.6 mln bbls, (3.72%) higher than a year ago.  Utilization is 2.70% higher than a year ago and 4.90% below the nine-year average.  It is 7.96% lower than the five-year, pre-Katrina average and 1.08% 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 19.526 million bpd, up 0.321 mln bbls on the week, and up 1.266 mln bpd and 6.93% against a year ago, reportedly.  Five weeks ago, it was 0.292 mln bpd and 1.57% higher than a year ago.  Four-week gasoline demand is at 9.153 mln bpd, up 1.17%, compared to up 3.51% three weeks ago.  It was down 48,000 bpd on the week.  Four-week distillate demand is now at 3.973 mln bpd, up 15.76%, compared to 3.583 mln bpd, down 0.08%, five weeks ago.  Four-week jet demand is now at 1.463 mln bpd, up 7.34% against a year ago, compared to down 3.99% four weeks ago.  Four-week residual fuel demand is at 0.490 mln bpd, down 9.59%, compared to down 24.76% two weeks ago.   Propane use is up 18.33% to 1.020 mln bpd, compared to 0.850 mln bpd (dn 8.50%) nine 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 a build of 0.616 million barrels in crude oil stocks, a build of 1.518 million bbls in distillate stocks and a drawdown of 3.194 million barrels in gasoline inventories. Refineries maintained their utilization rates, on aggregate and crude oil imports dropped dramatically (by 1.559 million bpd) , taking back a large part of last week’s increase of 2.592 million bpd.  Implied demand came in at a very healthy 9.573 million bpd in gasoline and at 4.139 million bpd in distillate.

       This was a mixed report, bullish for gasoline and slightly bearish for distillate, based just on inventory changes.  The decline in crude imports suggests lower runs and that, in combination with demand, was bullish for gas.

DOE Inventory Statistics       for the report released May 19th

Open Interest Analysis

  Crude oil open interest fell by 24 contracts on Thursday, when prices were all higher.  That looks like light, net, short-covering, which would be bearish.

  Heating oil open interest fell by 1,580 contracts on Thursday, when prices were higher.  That looks like short-covering and would be bearish.  Since May 14^th, 16,119 contracts have been liquidated.

  RBOB open interest fell by 3,670 contracts on Thursday, when prices were higher.  That looks like short-covering, which would be bearish.  Since May 3^rd, open interest is down 63,281 (20.45%).

  Natural gas open interest grew by 3,665 contracts on Thursday, when prices were higher.  That looks like new buying and is supportive.  We had a period of heavy liquidation and covering prior to this.

Thursday’s  Open Interest Changes:

Crude 1,361,036  dn 24     Heat 303,529  dn 1,580       RBOB 246,094dn 3,670     Nat gas 839,576 up 3,665

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 18^th, 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.