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EIA data – Crude inventory draw hardly makes a dent

 
17.01.2013

This week’s US EIA data surprised the market with a 1.0mmbbl draw on crude inventory; the market was expecting a 2.2mmbbl inventory build. However, that hardly made a dent on crude inventory (-0.3% WoW) and, moreover, there were inventory builds for both gasoline and distillate. Crude inventory remains above the top of the seasonal range, as does gasoline inventory, while distillate inventory levels continue to build.

Implied all product demand improved from the week before, but only marginally, up 0.2mmb/d (+1.1%) WoW to 18.0mmb/d. Demand remains lacklustre, more than 1mmb/d below the seasonal average. However, its 52-week YoY average continues to improve and is now at -1.4% from last week’s -1.6%, albeit against a lowered base line. Implied gasoline demand was up 0.3mmb/d (3.9%) WoW to 8.3mmb/d, rising above the bottom of the seasonal average. Implied distillate demand was also up, +0.4mmb/d (11.7%) WoW to 3.4mmb/d, amid forecasts of colder weather ahead.

Crude and product imports were each 0.3mmb/d lower WoW, while refinery utilisation was down 1.2% WoW. The fall in crude imports, mitigated by lower refinery throughput, explains much of the crude inventory draw. Meanwhile, US domestic production was up 39kb/d in the week to reach 7,041kb/d. At such a growth rate, US domestic production would be comfortably on the path to meeting and exceeding the 7.3mmb/d production the EIA.

Yesterday also saw OPEC release its Monthly Oil Market Report (MOMR), in which it had December OPEC production, based on secondary sources, at 30.4mmb/d, down 0.5mmb/d on upwardly revised November production. The report had Saudi production down 0.4mmb/d MoM to 9.2mmb/d and Iraqi production down 0.2mmb/d MoM.

According to the MOMR, the world was oversupplied in 2012 by 1.1mmb/d. Based on the report’s 2013 forecasts and keeping OPEC production constant at December’s reduced production level, 2013 is still set to be oversupplied, by 0.7mmb/d, we calculate. The IEA publishes its Oil Market Report tomorrow. 

Colin Smith, Marc Jacouris
VTB Capital analyst

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