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EIA data – Neutral at best

 
19.07.2012

This week’s EIA data recorded a 0.3mmb/d (-3.2%) WoW drop in implied gasoline demand, taking it to the lowest level since mid-April. Countering this were 0.1mmb/d increases in weekly demand for distillate, jet kerosene and the 'other products' category, taking implied all product demand to a net increase of 0.1mmb/d (+0.3%) WoW. On a YTD basis, average implied all product demand also improved to -2.6%, from -2.7%, YoY.

Crude inventory fell a mere 0.8mmbbl, compared with last week’s 4.7mmbbl draw, leaving crude inventory comfortably above the range. Key to this were a rise in crude imports (+0.3mmb/d WoW) and a 0.2mmb/d WoW fall in refinery throughput.

There was a 2.6mmbbl WoW gain in distillate inventory which was more than double market expectations. That took it back just within the historical range, though it is not entirely clear what the key drivers were. On the other hand, gasoline inventory dropped 1.8mmbbl WoW, against market expectations of an inventory build, with a fall in imports being a key contributing factor.

Brent has risen circa 15% since hitting USD 89/bbl in June. While this might reflect market concerns over the effects of the new Iran sanctions, shortcovering and other factors, the market still appears oversupplied. On the IEA’s latest estimates, OPEC production continues to run well above the call on OPEC, with Saudi production hitting a modern day record of 10.15mmb/d in June. 

Colin Smith, Marc Jacouris
VTB Capital analyst

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