US crude oil stocks increased by 6.5 MMBbl last week. Gasoline inventories increased by 3.9 MMBbl and distillate inventories increased by 1.6 MMBbl. Yesterday afternoon, API had reported a crude oil build of 5.8 MMBbl alongside builds of 2.9 MMBbl for gasoline and 2.3 MMBbl for distillate inventories. Analysts had expected a crude oil build of 3.06 MMBbl. The most important number to keep an eye on, total petroleum inventories, posted another large increase of 5.3 MMBbl. For a summary of the crude oil and petroleum product stock movements, see table below.
US production was estimated to be down 46 MBbl/d (almost all from lower 48) from last week per EIA’s estimate. Imports were up 480 MBbl/d last week to an average of 8.3 MMBbl/d. Refinery inputs averaged 15.9 MMBbl/d (100 MBbl/d less than last week), leading to a utilization rate of 88.2%. The petroleum stocks report is bearish, due to the large total petroleum inventory build and higher than expected crude stocks build. Prices were on the rise due to positive news from production cut compliance by OPEC members, going against the bearish petroleum stocks report. WTI prices are up $0.80/Bbl, trading at $53.61/Bbl at the time of writing.
WTI prices continue to trade in the $50-55/Bbl range, with the market weighing bullish production cut estimates from OPEC and non-OPEC countries carrying quotas and bearish sentiment regarding US shale production potential. Prices were down Monday on concerns that the rising rig count in the US was poised to erase a large part of the declines from quota carrying countries. On Tuesday, prices climbed higher after a Reuters survey showed crude oil supply from the quota carrying OPEC members averaged 30.01 MMBbl/d in January, versus 31.17 MMBbl/d in December. Although the survey hints at roughly 80% compliance, which is exceptional for OPEC, analysts still await the release of reliable third party data. The market is also eyeing the start of refinery maintenance season, which will introduce its usual seasonality to crude oil runs. President Trump’s stance on Keystone XL, DAPL, and the Border Adjustment Tax are also on the radar as the market sorts through what this would all mean for commodity flows domestically and globally. The focus remains on quota compliance and the potential for US production growth alongside Libyan and Nigerian production levels and expectations. Drillinginfo still expects prices to stay range-bound between $50-$55/Bbl in the short term as the market awaits definitive third party data regarding quota compliance (Feb. 10th for data from the IEA) and monitors the troubling inventory data that continues to hint at an imbalance.
Please find the updated DrillingInfo charts on the link below:
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