For the sixth week running, the EIA data recorded a larger than expected build in crude inventory, together with a larger than expected products draw. Crude inventory builds are typical in the run-up to the summer driving season, though this year’s build has been steeper than normal, taking crude inventory levels above the prior five-year range. Days forward cover remain average to ample for crude and gasoline, albeit a bit tighter for distillate.
Implied all product demand remains weak, with a 0.2mmb/d WoW fall taking it to 18.5mmb/d. All product demand is down 4.7% for the YTD YoY and -3.2% on a 52-week average YoY basis (though this was a marginal improvement on last week’s 52-week average). Gasoline demand showed a marginal improvement on a WoW basis, gaining 0.2mmb/d to 8.7mmb/d, and also on a 52-week average basis, now at -3.6% YoY. Distillate demand, however, continues to drop and was down 8.8% YoY, down 4.1% for the YTD YoY and down 0.7% on a 52-week average YoY basis.
Imports remain very weak on the back of strong domestic production and low demand. We expect that means inventory is increasing in other regions where it has been tight. In the coming days, the technical press is to report on OPEC’s April production. We expect another MoM rise in production and for this to be reflected in a further rise global inventories.