Oil Inventory Reports

This week’s DOE report has had six of eight years showing draws in both refined products – curiously close – of 1.933 and 1.966 million bbls for distillate and gasoline, respectively (over the six years of draws).  Utilization has been higher in four years and lower in the other four years.  Crude oil imports have fallen in four years out of the last six.  We still have a solid four to eight weeks of turnarounds left, but refiners do seem to have rotated units in and out of service, with the ‘luxury’ of so much spare capacity.  As a result, utilization has not dropped as much – although it is extremely low to begin with.

Last Week’s Inventory Comparison:  Distillate stocks are now 7.5 million bbls, or 5.17%, higher than a year ago.  Heating oil inventories are 5.8 mln bbls, or 15.72%, higher than they were a year ago.  Gasoline stocks are 14.8 mln bbls (up 6.84%) higher against a year ago.  Crude oil stocks are now 16.7 million bbls, or 4.71%, lower than a year ago.  Residual stocks are 2.2 mln bbls (5.82%) higher than a year ago, jet fuel stocks are 1.7 mln bbls, (4.05%) higher than a year ago.  Utilization is 0.23% lower than a year ago and 5.33% below the eight-year average.  It is 7.50% lower than the four-year, pre-Katrina average and 3.15% below the average of the four years since the big hurricanes (Katrina & Rita) in 2005.

Last Week’s Demand:  Four-week, total refined products demand came in at 19.095 million bpd, up 0.100 mln bbls on the week, and up 0.239 mln bpd and 1.27% against a year ago.  Two weeks ago, it was 0.159 mln bpd and 0.83% lower than a year ago.  Four-week gasoline demand is at 8.741 mln bpd, down 0.34%, compared to up 0.32% seven weeks ago.  It was up 111,000 bpd on the week.  Four-week distillate demand is now at 3.701 mln bpd, down 6.82%, compared to down 0.98% seven weeks ago.  Four-week jet demand is now at 1.321 mln bpd, down 1.93% against a year ago, compared to up 8.17% seven weeks ago.  Four-week residual fuel demand is at 0.602 mln bpd, up 4.70%, compared to down 34.14% three weeks ago.   Propane use is up 9.10%, to 1.462 mln bpd.  Gasoline supply increased by 572,000 bpd this week, while demand was up 543,000 bpd on the week.

Last Week’s API Report:  This week’s API report showed a draw of 3.137 mln bbls in crude oil stocks, a draw of 0.834 mln bbls in distillate stocks and a build of 1.738 mln bbls in gasoline inventories.  Utilization was up 0.9% to 80.8%.  Implied demand came in at a healthy 9.310 mln bpd in gasoline and at a decent 4.306 mln bpd in distillate.  Crude oil imports were up 1.153 mln bpd to 9.192 mln bpd.  Both implied demand figures improved from really dreadful levels reported last week, and imported more crude oil and seemed interested in refining more, as well. 

DOE Weekly Inventory Statistics

Source: US Department of Energy’s Energy Information Administration

Open Interest Analysis

Crude oil open interest fell by 11,304 contracts on Thursday, when prices were lower.  That looks like heavy long liquidation, which would be supportive.  Recent changes in open interest have been consistently positive.

Heating oil open interest fell by 5,372 contracts on Thursday, when prices were lower.  That looks like long liquidation, and is supportive.

RBOB open interest fell by 3,528 contracts on Thursday, when prices were lower, which would be long liquidation. 

Natural gas open interest grew by 9,443 on Thursday, when prices were lower.  Once again, that looks like heavy, new selling, presumably by one or more large funds. 

Thursday’s Open Interest Changes:

Crude 1,284,924  dn 11,304 Heat 299,658  dn 5,372 RBOB 261,583 dn 3,528 Nat gas 801,500 up 9,443    

CFTC Commitments of Traders for Nymex (for the period ended Tuesday, Feb 2nd)

   Crude oil prices rallied $1.44/bbl over the latest reporting period, and the best buying came from Managed Money accounts.  They bought 14,963 new longs and added 2,900 shorts.  Producers liquidated 16,027 longs but also covered 14,302 shorts.  Other Reportables also covered 8,096 shorts, while liquidating 3,243 longs.  Swap Dealers liquidated 16,820 longs and added 7,358 new shorts and were the only pure sellers.  Managed Money accounts were the best new buyers, but short-covering by Producers and Other Reportables, doubtless leading into the March crude contract expiration, also boosted prices.

    In heating oil futures, prices rallied 3.60 cents a gallon, and the best net buying came from Managed Money accounts, which added 10,901 new longs and covered 5,938 shorts.  The other categories sold into strength, with Producers liquidating 3,741 longs and adding 10,900 shorts, Swap Dealers liquidating 4,838 longs and covering just 6 shorts, and Other Reportables liquidating 3,389 longs and adding 1,411 shorts.  Managed Money was the motive force behind higher prices.

    Gasoline prices gained 7.74 cents a gallon during the period under review.  Managed Money accounts added 13,745 new longs and covered 2,425 shorts, while Other Reportables added 208 new longs and covered 89 shorts.  Producers liquidated 6,016 longs and added 9,891 new shorts into the rise, while Swap Dealers liquidated 2,319 longs and added 593 new shorts.  Funds were the biggest buyers, with commission houses buying very lightly.  Producers were the best sellers.

    In natural gas, prices dropped 53.2 cents during the period under review.  Here, it was cut and dried; Managed Money sold 19,855 new shorts and liquidated 7,655 longs (short 3-to-one).  Other Reportables added 6,111 longs and covered 9,400 shorts, Producers added 2,851 longs and covered 2,900 shorts and Swap Dealers added 2,409 longs and covered 3,041 shorts.  Everyone sees a bargain, here, except the funds pressing quotes lower.  They were the best and only sellers.