OIL INVENTORIES DROP, BUT DISTILLATES SURGE AS ECONOMIC OUTLOOK IS CLOUDY

The Energy Information Administration (EIA) released its weekly report today on the status of petroleum inventories in the United States. Here are some highlights:

CRUDE OIL INVENTORIES:
Crude oil inventories decreased by 3.4 million barrels (MMbbl) to a total of 445.1 MMbbl. At 445.1 MMbbl, inventories are 13.0 MMbbl below last year (-2.8%) and are 4% below the five-year average for this time of year. Inventories in Cushing, OK, the NYMEX delivery point, fell 0.7 million barrels to a total of 33.5 million barrels. The Strategic Petroleum Reserve (SPR) rose 500,000 barrels from the prior week and stands at 373.1 million barrels, 7.6% above the year-ago level.

Domestic crude oil production rose 100,000bpd to 13.3 million barrels per day, 1,000,000 bpd higher than the year-ago period. Alaska oil production rose 1,000bpd to 384,000 bpd, while production in the Lower 48 rose 100,000bpd to 12.9 million barrels per day.

GASOLINE INVENTORIES:
Gasoline inventories decreased by 2.0 million barrels (MMbbl) to a total of 229.7 MMbbl. At 229.7 MMbbl, inventories are up 10.2 MMbbl, or 4.7% higher than a year ago, and are about 1% below the five-year average for this time of year.
Here’s how individual regions and their gasoline inventory fared:
East Coast (-0.5 MMbbl)
Midwest (-0.2 MMbbl)
Gulf Coast (-0.7 MMbbl)
Rockies (-0.3 MMbbl)
West Coast (-0.2 MMbbl)

It’s important to note which regions saw increases/decreases as this information likely drives prices up (in the case of falling inventories) or down (in the case of rising inventories).

DISTILLATE (DIESEL, HEATING OIL) INVENTORIES:
Distillate inventories increased by 4.9 million barrels to a total of 124.6 MMbbl. At 124.6 MMbbl, inventories are up 6.4 MMbbl, or 5.4% higher than a year ago. Distillate inventories stand about 8% below the five-year average for this time of year.

IMPLIED GASOLINE DEMAND:
Gasoline supplied to the market amounted to 9.40 million barrels per day (MMbpd), or 26,000bpd lower than the previous week. So far in 2024, implied gasoline demand (“products supplied”) is 1.2% lower versus 2023, per the EIA.

REFINERY OUTPUT/UTILIZATION:
Refinery utilization increased by 1.9 percentage points versus last week’s numbers to reach 95.4%. Gasoline production increased to 10.3 million barrels per day while distillate fuel production increased to 5.1 million barrels per day last week.
Utilization rates for the last week were as follows:
East Coast: 92.3% (-0.1%)
Midwest: 95.3% (+2.2%)
Gulf Coast: 97.0% (+1.6%)
Rocky Mountains: 95.6% (+0.4%)
West Coast: 90.4% (+3.3%)

These percentages show how much of a region’s overall capacity was used to refine oil. It’s important to note these percentages because the lower the utilization percentage, the lower the output, which has a direct impact on local gasoline prices. If refiners in your region have lower or falling utilization rates, you’re more likely to see gas prices rise.

OVERALL SUPPLY:
Total oil stocks in the United States (excluding the SPR) are up by 7.5 MMbbl (+0.6%) versus a year ago and stand at 1.286 billion barrels (excluding the Strategic Petroleum Reserve). Including the SPR, total stocks are up 33.8 million barrels (+2.1%) versus a year ago.

IMPORTS/EXPORTS:
The U.S. imported 6.76 MMbpd of crude oil per day last week, up 214,000 bpd versus the previous week, while crude oil exports fell by 402,000 bpd to 4.0 MMbpd. Total motor gasoline imports last week averaged 768,000 bpd. The U.S. also imported 139,000 bpd of distillate fuels. However, during the same timeframe, the U.S. exported 919,000 bpd of finished gasoline and 1,103,000 bpd of distillates. In total, U.S. companies exported 10.52 MMbpd of oil and petroleum products.

Before the report was released, the price of West Texas Intermediate crude oil was up 17 cents to $81.58 per barrel. Soon after the report was released, oil was up 20 cents per barrel.