This week’s EIA data saw crude oil inventory maintain its upward trajectory in spite of an unexpectedly strong return in refinery utilisation. Crude inventory ended the week to 22 February at 377.5mmbbl, 1.1mmbbl higher than the week before and nearly 12% (39.8mmbbl) above the seasonal average.
An unexpected inventory gain of 0.6mmbbl WoW saw distillate inventory break the recent trend of weekly inventory draws, keeping inventory levels just above the bottom of the seasonal range. However, there was a 1.9mmbbl draw in gasoline inventory, nearly double market expectations, resulting in inventory levels dropping below the seasonal average.
Refinery utilisation jumped 2.2% WoW to 85.1% utilisation, above the top of the seasonal range, after a 0.3mmb/d (+2.4%) WoW increase in refinery crude throughput. That was mostly offset by a 0.3mmb/d (+3.5%) WoW increase in crude imports.
US crude oil domestic production dipped 22kb/d WoW to 7,096kb/d. The YTD growth rate implies full year average production of 7.4mmb/d or growth of 0.9mmb/d YoY, we estimate. That is a little ahead of the 0.8mmb/d YoY growth the EIA has forecasted for 2013.
There was a counter-seasonal increase in implied all product demand, up 0.3mmb/d (1.5%) WoW to 18.7mmb/d. Implied demand for gasoline picked up 0.2mmb/d (+1.9%) WoW to 8.6mmb/d, the highest YTD. However, implied demand for distillate plunged 0.3mmb/d (-8.0%) WoW, dropping below the bottom of the seasonal range. On a 52-week YoY average basis, all product demand improved to -0.6%, from -0.7% last week.
Iran and the P5+1 group concluded their two-day negotiations in Almaty, Kazakhstan yesterday, with little sign of real progress, but the parties are to meet again in April.
Oil prices continue to sell off and have now dropped almost USD 7/bbl since the middle of February.