Oil Inventory Reports

Over the last eight years, gasoline stocks have been both higher and lower, four years for both.  The average is a draw of slightly less than 900,000 bbls.  Another factor that could have a bearing on this week’s statistics is the history of crude oil import increases.  Four of the last six years have had an increase in imports, with the average increase over those four years coming in at 572,000 bpd.  We had a large increase last week, which might mean it won’t occur this week.  The average crude oil build for this time of year is more than 5 million barrels.

DOE History:  Distillate stocks have fallen in six of the last eight years, by an average of 1.738 mln bbls.  The eight-year average is a draw of 1.276 mln bbls (last week’s average draw was 1.266 mln bbls).  Gasoline stocks fell in four of the last eight years, for a four-year average draw of 4.200 mln bbls.   The eight-year average was a draw of 0.897 mln bbls.  Crude oil stocks have been higher in all of the last eight years for an eight-year average build of 5.080 mln bbls.  Utilization has been higher in four of the last eight years and has an eight-year average increase of 0.024%, with an eight-year average utilization figure of 87.28%.  The four-year, pre-hurricane utilization average was 90.30%.  Since Katrina, refineries have run at an average utilization rate of 84.25%.  Crude oil imports have been higher in four of the last six years, and the average crude oil import figure over the last six years has increased 381,000 bpd.  The average crude oil import figure over the last six years has been 10.113 million bpd.  Imports were 0.716 mln bpd below that figure in last week’s report.   

Last Week’s Inventory Comparison:  Distillate stocks are now 1.0 million bbls, or 0.69%, higher than a year ago.  Heating oil inventories are 4.0 mln bbls, or 10.90%, higher than they were a year ago.  Gasoline stocks are 8.4 mln bbls (up 3.89%) higher against a year ago.  Crude oil stocks are now 10.0 million bbls, or 2.77%, lower than a year ago.  Residual stocks are 0.9 mln bbls (2.30%) lower than a year ago, jet fuel stocks are 1.1 mln bbls, (2.61%) higher than a year ago.  Utilization is 0.90% lower than a year ago and 6.14% below the eight-year average.  It is 8.83% lower than the four-year, pre-Katrina average and 3.45% 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 19.360 million bpd, up 0.013 mln bbls on the week, and up 0.676 mln bpd and 3.61% against a year ago, reportedly.  Six weeks ago, it was 0.159 mln bpd and 0.83% lower than a year ago.  Four-week gasoline demand is at 8.953 mln bpd, up 1.19%, compared to down 1.26% five weeks ago.  It was up 6,000 bpd on the week.  Four-week distillate demand is now at 3.761 mln bpd, down 0.95%, compared to down 9.08% seven weeks ago.  Four-week jet demand is now at 1.289 mln bpd, down 6.59% against a year ago, compared to up 8.17% 11 weeks ago.  Four-week residual fuel demand is at 0.643 mln bpd, up 6.41%, compared to up 25.96% two weeks ago.   Propane use is up 6.40%, to 1.405 mln bpd, compared to 1.330 mln bpd (up 7.34%) a week ago.  The major figures were similar to slightly stronger than they were a week ago. 

Last Week’s API Report:  This week’s API report showed a huge build of 7.514 mln bbls in crude oil stocks, a draw of 2.534 mln bbls in distillate stocks and a small draw of only 0.081 mln bbls in gasoline inventories.  Utilization was down 0.5% to 80.8%.  Implied demand came in at a respectable 9.565 mln bpd in gasoline (after two strong weeks) and at 4.295 mln bpd in distillate.  Crude oil imports were up an eye-catching 1.272 mln bpd to 9.189 mln bpd.  Crude imports accounted for the build.

DOE Weekly Inventory Statistics

Source: US Department of Energy’s Energy Information Administration

Open Interest Analysis

Crude oil open interest fell by 7,215 contracts on Thursday, when prices dropped.  That looks like more long liquidation, which would be supportive.  Open interest is up 12,756 for the month of March, so far.  A week earlier, it had been up 129,459.

      Heating oil open interest fell by 4,060 contracts on Thursday, when prices were lower.  That looks like net, long liquidation, which would be supportive.  Open interest has increased by 25,751 contracts since March 1st.

RBOB open interest grew by 969 contracts on Thursday, when prices were lower, which looks like net new selling, which would be bearish.  Open interest is up 62,421 contracts since March 1st – which is the biggest net gain in the group.

Natural gas open interest grew by 10,707 on Thursday, when prices were lower.  That looks like heavy, new selling, which tells us the funds were back in there pushing prices to their new lows on Thursday.

Thursday’s Open Interest Changes:

Crude 1,284,017  dn 7,215 Heat 322,398  dn 4,060 RBOB 324,188 up 969Nat gas 837,152 up 10,707        

CFTC Commitments of Traders for Nymex (Forensic analysis for the period ended Tuesday, March 23rd)

Crude oil prices dropped $0.06/bbl over the latest reporting period, and the best selling came from Managed Money long liquidation.  These accounts – funds – liquidated 11,042 longs and added 1,802 new shorts.  Producers also liquidated heavily, more than funds, but not on a net basis.  Producers kicked out 33,031 existing longs, but they also covered 31,640 existing shorts.  Swap Dealers were buying into the weakness, adding 11,410 new longs against just 199 new shorts.  Other Reportables, which include commission houses, liquidated 283 existing longs and covered 903 existing shorts.  Fund liquidation ‘allowed’ prices to decline (they were heavy buyers for weeks) and Producer liquidation was also a major factor pushing prices lower.

    In heating oil futures, prices lost 1.25 cents a gallon, and the best net selling came from Managed Money accounts, which liquidated 4,074 existing longs and covered 2,687 shorts.  Other Reportables added 36 new longs and added 1,398 new shorts.  Producers added 1,468 longs and covered 1,462 existing shorts.  And Swap Dealers added 566 new longs and 198 new shorts.  Here, as well, managed money or fund liquidation helped push quotes lower – after powering them higher for weeks.

    Gasoline prices fell 1.22 cents a gallon during the period under review.  Managed Money accounts liquidated 2,850 existing longs and added 1,384 new shorts.  The others, which had been sellers, were buying.  Producers added 11,054 longs and 8,782 shorts.  Swap Dealers added 755 longs and covered 215 shorts.  Other Reportables added 1,781 longs and covered 153 shorts.

    In natural gas, prices dropped 21.7 cents during the period under review.  Managed Money accounts added 4,025 new longs against the sale of 2,467 new shorts.  Other Reportables added 6,198 longs and 6,746 shorts.  Producers added 2,768 longs and 355 shorts.  Swap Dealers liquidated 2,643 longs and sold 356 new shorts.  Swap Dealers were the best net sellers, after weeks of fund selling against everyone else’s buying.  Commission houses were the best gross sellers, although they bought nearly as much.  Only Swap Dealers are net long here (24 longs per short) with funds holding three shorts for each long.  

Courtesy Peter Beutel