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US crude oil stocks decreased by 1.7 MMBbl. Gasoline and distillate inventories decreased 3.1 MMBbl and 2.7 MMBbl, respectively. Yesterday afternoon, API reported a crude oil build of 4.45 MMBbl alongside a gasoline draw of 0.7 MMBbl and a distillate draw of 3.5 MMBbl. Analysts were expecting a crude oil build of 2.2 MMBbl. Total petroleum inventories posted a large decrease of 9.0 MMBbl.
US crude oil production remained unchanged last week, per the EIA’s estimates. Crude oil imports were down 0.44 MMBbl/d last week, to an average of 5.9 MMBbl/d. Refinery inputs averaged 15.9 MMBbl/d (0.43 MMBbl/d more than last week’s average), leading to a utilization rate of 85.2%. Despite crude oil and total stocks withdrawals, prices are pressured with stocks in Cushing posting a 30 MMBbl build and due to lack of news from the US-China trade deal negotiations. Prompt-month WTI was trading down $0.86/Bbl, at $53.62/Bbl; at the time of writing.
Crude prices got a boost on Tuesday amid reports that parties to the OPEC+ agreement are mulling additional cuts to production when they meet again in December. In its last session before expiry, CME WTI futures for November delivery settled at $54.16/bbl, up from $53.31/bbl the day before. WTI for December delivery was also up $0.81/bbl on the day’s news. Sentiment was also bolstered by earlier news that China increased its crude oil import quota for independent refiners. With the latest announcement, total quotas awarded in 2019 will come to 3.3 MMBbl/d, up nearly 0.3 MMBbl/d compared to quotas awarded in the full year of 2018 (largely due to a spate of recent refinery capacity additions). Chinese independent refiners seldom allow crude import quotas to go unused because this would affect the government’s computation of future quota awards. Despite these bullish developments, however, our global liquids balance for 2020 still appears to be well supplied amid continued weakness in the economic growth and, therefore, demand for petroleum products. Indeed, yesterday’s OPEC+ news came with a big asterisk beside it as talk of future cuts was prompted by growing demand concerns. Furthermore, Saudi Arabia has not committed to making further production cuts and will instead press Iraq and Nigeria to come into full quota compliance.