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EIA data – Inventory rebalancing


Yesterday’s EIA data for the week to 6 July recorded a third consecutive weekly fall in US crude inventory, which at 4.7mmbbl was the largest drop YTD and considerably greater than the market was expecting. Concurrently, there were larger than expected builds in gasoline and distillate inventories, with refineries running at a YTD-high utilization rate of 92.7% and throughput, at 15.8mmb/d, the highest in nearly five years. Even so, crude inventories remain at very high levels; we expect further inventory rebalancing to develop.

Implied all product implied demand dropped sharply, more than 1.0mmb/d (-5.4%) WoW . Most of the damage came from a 0.6mmb/d (-15.7%) fall in distillate demand which might be more attributable to the impact of the US Independence Day holiday week on industrial activity. On a YTD-basis, average all product demand marginally improved to -3.0% from -3.1% YoY. Meanwhile, gasoline prices rose for the first time since the start of April, likely reflecting the recent rise in oil prices, we believe. The EIA and OPEC have now released their Short Term Energy Outlook and Monthly Oil Market Report, respectively, for July.

The EIA cut its call on OPEC 0.17mmb/d and 0.52mmb/d for 2012 and 2013, respectively, predominantly due to downward revisions to in global economic growth estimates. There were no notable changes to OPEC’s projections. Both the EIA and OPEC have the call on OPEC crude falling YoY in 2013. The IEA publishes its Oil Market Report today.

The US EIA data recorded a 4.7mmbbl fall in crude inventory (vs. -1.4mmbbl expected), a 3.1mmbbl build in distillate (vs. +0.6mmbbl expected) and a 2.8mmbbl gain in gasoline (vs. +0.5mmbbl expected).

Colin Smith
VTB Capital analyst

oil, gasoline, USA, IEA, OPEC

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