This week’s EIA data had crude oil inventory rising 3.8mmbbl (+1.0%) WoW, nearly five times the market expectations of a 0.8mmbbl rise. However, total inventory, excluding SPR, fell 2.4mmbbl (-0.2%) WoW. During February, total inventory, excluding SPR, fell nearly 17.0mmbbl (-1.5%) while crude inventory rose 9.7mmbbl (+2.6%), meaning oil product inventory was down 26.7mmbbl, largely due to the refinery turnaround season, we believe. Crude inventory has now reached 381.4mmbbl, comfortably above the top of the seasonal range.
Refinery utilisation was sharply down, -2.9% WoW to 82.2%, while the market had expected a 0.4% increase in utilisation. Indeed, the utilisation rate was only just above the bottom of the seasonal range, as was refinery crude throughput.
The 0.5mmb/d drop in refinery crude throughput was more than offset by a 0.7mmb/d (-8.2%) WoW fall in crude imports, which might well help to cement China’s recent status as the world’s largest net oil importer (see RMC of 6 March). Domestic crude oil production was flat WoW at just under 7.1mmb/d, leaving 1.5mmbbl of the 3.8mmbbl crude inventory gain unaccounted for.
There was a 0.4mmb/d (-2.1%) WoW fall in implied all product demand, to 18.3mmb/d, once more back to the bottom of the seasonal range. In a reversal of last week’s fortunes, implied demand for gasoline dropped 0.2mmb/d (-2.7%) WoW to average 8.4mmb/d, while implied demand for distillate jumped 0.4mmb/d (+10.1%) WoW to 3.9mmb/d and back in sight of the seasonal average. However, implied demand for the ‘other oil products’ category crashed, down 0.5mmb/d (-14.4%) WoW. On a 52-week YoY average basis, all product demand improved to -0.4%, from -0.6% last week.
Hugo Chavez, President of Venezuela, a major oil producing nation (2.5mmb/d in 2012 per the IEA), OPEC member and holder of the world’s largest proven reserves (according to BP), has passed away. Oil markets appear to have reacted to the news, with Brent trading higher, initially, before reversing the gains. In our view, it is as yet unclear where the future of Venezuela’s oil industry lies, given that Chavez was not a friend of foreign investors.