In the US EIA data for the week to 13 December, implied all-product demand jumped 2.4mmb/d (+13.2%) WoW in what is one of the largest WoW movements on record, to reach a five-year high of 21.0mmb/d. Implied demand rose in every product category bar jet kerosene, which was flat WoW. Demand for gasoline, distillates and the ‘other oil products’ category, which combined comprise 84% of total demand, increased 0.7mmb/d (+8.0%), 0.8mmb/d (+23.8%) and 0.9mmb/d (+24.1%) WoW, respectively. Distillate and gasoline demand are now around their seasonal average, having jumped from the bottom and below the bottom of their seasonal range. Implied demand for the ‘other oil products’ category, which was already above the top of its seasonal range, climbed to 4.5mmb/d, the highest since 2005.
As we have previously reported, the EIA’s calculation for deriving the weekly demand data contains a number of estimates, one of which is the level of product exports. The EIA has in recent months been underestimating the level of product exports in its weekly calculations, which in turn results in the over-statement of demand. That might help explain the jump in demand seen this week.
Crude imports recovered from last week’s YTD low, up 0.9mmb/d WoW to 7.7mmb/d. Domestic crude production was essentially flat WoW at 8.1mmb/d. The growth rate since the beginning of the year implies full year average crude production of 7.5mmb/d, or a 1.0mmb/d (+15%) YoY increase. For 2014, the EIA expects domestic production to average 8.5mmb/d in 2014.
Refinery throughput was down 0.2mmb/d WoW to 15.9mmb/d, taking utilisation levels lower, down 1.1% where the market expected a small rise in utilisation. Nevertheless, refinery throughput levels remain high, comfortably above the top of the seasonal range.
Crude inventory levels remain comfortable, but are now just above the top of the seasonal range after a third consecutive stock draw. The 2.9mmbbl WoW stock draw was in line with market expectations. There was a sharp draw in product inventory, down 9.7mmbbl WoW. All-product inventory levels are close to the bottom of the seasonal range (Figure 2). That was due to a large 7.2mmbbl WoW stock draw in the ‘other oil products’ category, while a 2.1mmbbl stock draw took distillate inventory levels below the bottom of its seasonal range. However, gasoline inventory levels remain plentiful and at the top of the seasonal range.
The EIA has also published the Early Release Report of its Annual Energy Outlook 2014 (AEO2014). The AEO2014 reference case sees US domestic production rising from 6.5mmbb/d in 2012 to 9.6mmb/d in 2019, a 22% uplift from the previous year’s projections. The EIA sees the US becoming a net exporter of LNG from 2016.
The US EIA data recorded a 2.9mmbbl draw in crude inventory (in line with market expectations), a 2.1mmbbl draw in distillate inventory (vs. +0.2mmbbl expected) and a 1.3mmbbl build in gasoline inventory (vs. +1.7mmbbl expected).