Oil Inventory Reports

This week’s DOE report has traditionally been the one that has brought us back from winter or first quarter maintenance programs, on balance.  Of course, this has not happened every year.  But, in five of the last nine years, this week has had a substantial increase in refinery utilization rates (2.0% or more).  We have also typically increased crude oil imports this week, in anticipation of higher run rates to follow.  This year, both of those processes have already started, so there is a chance that this week will be less significant, in comparison.  There is, of course, the other possibility, that this week will increase both crude imports and refinery utilization to even higher levels.

DOE History

Distillate stocks have risen in four of the last nine years, by an average of 1.200 mln bbls.  The nine-year average is a build of 0.267 mln bbls.  Gasoline stocks have fallen in six of the last nine years, for a six-year average draw of 1.768 mln bbls.   The nine-year average was a draw of 0.789 mln bbls.  Crude oil stocks have been higher in six of the last nine years for a six-year average build of 3.183 mln bbls and a nine-year average build of 1.744 mln bbls.  Utilization has been higher in six of the last nine years and has a nine-year average increase of 1.4%, with a nine-year average utilization figure of 90.47%.  The five-year, pre-hurricane utilization average was 93.84%.  Since Katrina, refineries have run at an average utilization rate of 86.25%.  Crude oil imports have averaged 9.865 million bpd over the last six years, with an average increase 264,000 bpd seen this week.  This week has traditionally started the return to higher crude oil imports and refinery utilization rates.

Last Week’s Inventory Comparison

Distillate stocks are now 2.0 million bbls, or 1.38%, higher than a year ago.  Heating oil inventories are 5.1 mln bbls, or 13.53%, higher than they were a year ago.  Gasoline stocks are 5.7 mln bbls (up 2.64%) higher against a year ago.  Crude oil stocks are now 13.0 million bbls, or 3.54%, lower than a year ago.  Residual stocks are 4.6 mln bbls (12.11%) higher than a year ago, jet fuel stocks are 0.3 mln bbls, (0.72%) higher than a year ago.  Utilization is 5.19% higher than a year ago and 3.69% below the nine-year average.  It is 7.43% lower than the five-year, pre-Katrina average and 0.99% above 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 19.069 million bpd, up 0.045 mln bbls on the week, and up 0.454 mln bpd and 2.44% against a year ago, reportedly.  Nine weeks ago, it was 0.159 mln bpd and 0.83% lower than a year ago.  Four-week gasoline demand is at 9.137 mln bpd, up 2.78%, compared to up 1.68% one week ago.  It was up 119,000 bpd on the week.  Four-week distillate demand is now at 3.669 mln bpd, up 0.41%, compared to down 9.08% ten weeks ago.  Four-week jet demand is now at 1.405 mln bpd, down 2.16% against a year ago, compared to up 8.17% 14 weeks ago.  Four-week residual fuel demand is at 0.544 mln bpd, down 12.96%, compared to up 25.96% five weeks ago.   Propane use is down 8.05% to 1.017 mln bpd, compared to 1.330 mln bpd (up 7.34%) three weeks ago.  These numbers continued to improve, especially for total products supplied and for gasoline demand, which are the two most widely watched numbers coming out of this set of figures.

Last  Week’s API Report

This week’s API report showed a build of 1.405 mln bbls in crude oil stocks, a build of 1.714 mln bbls in distillate stocks and an unexpected build of 1.610 mln bbls in gasoline inventories.  Utilization was up 0.1% to 84.8%.  Implied demand came in at a mild 9.104 mln bpd in gasoline and at 3.995 mln bpd in distillate.  Crude oil imports were down 730,000 bpd to 9.210 mln bpd.  This week’s report was bearish, because it showed builds across the board, and the builds that were expected in crude oil and distillate stocks were larger than had been expected.  On the bullish side, crude imports dropped and this week’s increase in utilization was much smaller than the last two reported increases.

DOE Inventory Statistics

Open Interest Analysis

Crude

 

  Oil open interest grew by 2,388 contracts on Thursday, when prices were mixed.  The May contract dropped on heavy long liquidation, while the back months rallied on good buying.  Open interest is up 104,059 contracts in eight sessions.  It looks like new buying on the advances and liquidation on declines, but it has not been consistent.

  Heating oil open interest fell by 679 contracts on Thursday, when prices were higher.  That looks like light short-covering, which would be bearish.  It was light, though.

  RBOB open interest rose by 6,911 contracts on Thursday, when prices were lower, which looks like new selling and would be bearish.  Since March 1st , open interest is up 70,750 contracts.

  Natural gas open interest grew by 14,637 on Thursday, when prices were lower.  That looks like heavy new selling, which would be bearish.  Funds have continued to sell natural gas, although it looked like they covered on Friday.

Thursday’s  Open Interest Changes:

Crude 1,387,905  up 2,388 Heat 302,518  dn 679 RBOB 332,977up 6,911Nat gas 870,128 up 14,637            

CFTC Commitments of Traders for Nymex (Forensic analysis for the period ended Tuesday, April 13th)


   Crude oil prices rallied $0.96/bbl over the latest reporting period, and the best buying came from Producers, which added 54,173 new longs and 49,797 new shorts.  Swap Dealers liquidated 901 longs and added 3,487 new shorts.   Managed Money accounts liquidated 11,962 longs and covered 734 shorts.  Other Reportables added 576 new longs and 4,122 new shorts.  Producers ended up buying more than they sold, but the other three categories liquidated or sold more than they bought or covered.  And all three of those – Managed Money, Other Reportables and Swap Dealers were net sellers by substantial amounts.  The numbers do not seem to add up, either, with about 10,000 or 11,000 “extra” on the short side of the ledger, presumably with the long side having been taken by smaller non-reportable traders.  Still, it is interesting that so many traders, in this report, seem to have gone against their basic, existing positions.  In three out of four categories, traders went against their own net positions.

    In heating oil futures, prices gained 2.44 cents a gallon and the best buying seems to have come from Other Reportables, which bought 1,047 longs and sold 911 short.  Producers also covered more (14,704) than they liquidated (13,750).  Swap Dealers liquidated 3,124 longs and covered 126 shorts, while Managed Money liquidated 643 longs and covered 289 shorts.  Commission house buying pushed prices higher. 

        Gasoline prices rose 3.36 cents a gallon during the period under review.  Here, it was Swap Dealers buying, adding 2,672 longs and covering 207 shorts.  Producers added 3,963 longs and 5,590 shorts.  Managed Money liquidated 1,591 longs and added 744 shorts.  Without Swap Dealer buying, gasoline prices would not have been higher in the latest week. 

    In natural gas, prices rallied 14.1 cents during the period under review.  Managed Money and commission houses were selling and Producers and Swap Dealers were buying.  Managed Money accounts liquidated 427 longs and covered 5,143 new shorts.  Other Reportables liquidated 5,355 longs and covered 1,205 shorts.  Swap Dealers added 7,828 longs and added 726 shorts.  Producers liquidated 5,248 longs and covered 8,575 shorts.  The buying came from Swap Dealers and Producers covering shorts, while the selling as prices rose came from Managed Money and from Other Reportables (largely commission houses).