US crude oil stocks increased by 2.9 MMBbl. Gasoline and distillate inventories decreased 1.2 MMBbl and 3.9 MMBbl, respectively. Yesterday afternoon, API reported a crude oil build of 4.1 MMBbl alongside a gasoline draw of 5.9 MMBbl and a distillate draw of 4.0 MMBbl. Analysts were expecting a crude oil build of 2.4 MMBbl. Total petroleum inventories posted a decrease of 8.3 MMBbl.
US crude oil production increased 200 MBbl/d last week, per the EIA’s estimates. Crude oil imports were down 67 MBbl/d last week, to an average of 6.2 MMBbl/d. Refinery inputs averaged 15.7 MMBbl/d (0.36 MMBbl/d less than last week’s average), leading to a utilization rate of 85.7%. Prices got some support from positivity around US-China negotiations despite the crude build and stocks in Cushing posting a 26.9 MMBbl increase. Prompt-month WTI was trading up $1.02/Bbl, at
WTI for November delivery attempted to get off on the right foot Monday morning but landed flat on its face in early-afternoon trading. Trading on Tuesday proved no better, with prompt futures contracts closing not far from the prior day’s settlement at $52.63/bbl. Macro concerns about the health of the global economy and petroleum demand continue to dominate the news cycle, with the new head of the IMF yesterday announcing a 0.8 percentage point cut in its forecast of 2020 global GDP growth (previously set at 3.5%). If this rate of growth materializes, the world economy will be growing at the slowest pace since the 2008-2009 financial crisis.
Weakness in the global economy is setting up the market for an extension of oversupply conditions into next year. With this cloud hanging over the market, growing political unrest in Ecuador has barely registered. The recent removal of fuel subsidies has led to rioting, forcing the government to leave the capital in Quito. Road closures and the seizure of key oil installations caused production from three oil fields to be shut in, resulting in a loss of roughly 63 MBbl/d of Oriente heavy sour crude. While this may further support the already strong market for heavy sours and bolster spot prices for delivered crude on the West Coast, major benchmarks have barely been affected. Ecuador, which produces roughly 545 MBbl/d of crude oil, recently announced plans to leave OPEC next year due to the financial strains caused by the OPEC production quotas that were renewed in July.