Having spent six week above the five-year average, implied total product demand fell 0.6mmb/d WoW (-3.0%) in the latest EIA data set. That took demand fairly close to the bottom of the five-year range. Although most of the drop came in the volatile ‘other products category’, which saw implied demand drop 0.5mmb/d WoW (-13.7%), that was enough to see the 52-week cumulative YoY averages feather back across all-products, gasoline and distillate, against the prevailing trend of the last several weeks.
The WoW drop in crude inventory, although larger than expected at 2.8mmbbl, actually brought crude inventory closer to the top end of the range, given the typically larger drop in the upper boundary at this time of the year.
While the movements remain small, there were also signs that the sharp dichotomy in the respective inventory positions of gasoline and distillate are being ironed out of the system and that was reflected in the draw in gasoline, and the build in distillate. However gasoline only just dropped back into the top of the range while distillate is only marginally above the bottom.
Refinery utilisation fell 1.5% WoW to 89.4%, somewhat more than market expectations of a 0.2% drop. That was the first print below 90% in eight weeks, and although utilisation is experiencing its usual seasonal decline, the current rate is well above average and actual throughput dropped below the top of the range for the first time in eight weeks.
In a neutral environment, we would judge these figures to be neutral. However, with severe production disruptions in Libya and overall OPEC production falling, the market might prove more prone to the hunt for bullish threads. In that context, another overall inventory draw of 2.0mmbbl across crude, gasoline and distillate, in what remains very much the world’s largest and most visible oil market, in a context in which globally available inventory data is not obviously consistent with a large oversupply to the market, might prove such a thread, we believe.
The US EIA data recorded a 2.8mmbbl crude inventory draw (vs. -1.5mmbbl expected), a 2.0mmbbl build in distillate (vs. +1.0mmbbl expected) and a 1.2mmbbl draw in gasoline (vs. -1.6mmbbl expected).