Oil Inventory Reports

This week’s DOE report should show the initial results (or continuing results) of higher refinery utilization rates.  Utilization is 6.25% higher than a year ago and just 2.21% below the nine-year average for this time of year, and those figures are some of the most robust numbers we have seen in years coming into the start of May.  The fact that refiners are processing as much crude as possible and still ending up with barrels going into storage is an especially bearish situation.  We have not seen anything like this since late 1985, just before prices collapsed.  We are looking closely at the entire system – refinery utilization, crude imports and stocks, and refinery output here.

DOE History
Distillate stocks have risen in seven of the last nine years, by an average of 1.386 mln bbls.  The nine-year average is a build of 1.033 mln bbls.  Gasoline stocks have increased in eight of the last nine years, for an eight-year average build of 1.900 mln bbls.   The nine-year average was a build of 1.667 mln bbls.  Crude oil stocks have been higher in seven of the last nine years for a seven-year build of 2.214 mln bbls, against a nine-year average build of 1.022 mln bbls.  Utilization has been higher in seven of the last nine years and has a nine-year average utilization figure of 91.59%.  The five-year, pre-hurricane utilization average was 94.56%.  Since Katrina, refineries have run at an average utilization rate of 87.88%.  Crude oil imports have averaged 10.266 million bpd over the last six years, with an average increase of 25,000 bpd seen for this corresponding week.  Utilization remains the key factor for us.

Last Week’s Inventory Comparison

Distillate stocks are now 4.8 million bbls, or 3.27%, higher than a year ago.  Heating oil inventories are 5.9 mln bbls, or 15.05%, higher than they were a year ago.  Gasoline stocks are 10.0 mln bbls (up 4.68%) higher against a year ago.  Crude oil stocks are now 11.2 million bbls, or 3.04%, lower than a year ago.  Residual stocks are 8.7 mln bbls (24.03%) higher than a year ago, jet fuel stocks are 1.9 mln bbls, (4.49%) higher than a year ago.  Utilization is 6.25% higher than a year ago and 2.21% below the nine-year average.  It is 6.09% lower than the five-year, pre-Katrina average and 2.65% 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 18.708 million bpd, down 0.148 mln bbls on the week, and up 0.194 mln bpd and 1.05% against a year ago, reportedly.  Two weeks ago, it was 0.454 mln bpd and 2.44% higher than a year ago.  Four-week gasoline demand is at 9.211 mln bpd, up 3.14%, compared to up 1.68% three weeks ago.  It was down 012,000 bpd on the week.  Four-week distillate demand is now at 3.571 mln bpd, up 1.51%, compared to up 0.41% two weeks ago.  Four-week jet demand is now at 1.371 mln bpd, down 3.99% against a year ago, compared to up 8.17% 16 weeks ago.  Four-week residual fuel demand is at 0.492 mln bpd, down 25.34%, compared to down 12.96% two weeks ago.   Propane use is down 10.58% to 0.896 mln bpd, compared to 1.330 mln bpd (up 7.34%) five weeks ago.  Aggregate demand figures continue to disappoint, for the most part.  When we do get higher demand, it tends to be narrowly based or there for a brief period of time.

Last Week’s API Report

      This week’s API report showed a build of 5.344 million barrels in crude oil stocks, a draw of 0.658 million barrels in gasoline and a draw of 1.369 million barrels in distillate stocks.  Refinery utilization was down 0.4% to 84.7%.  Crude oil imports were down 456,000 bpd to 9.439 million bpd.  This week’s report showed draws in refined products sytocks and a much larger-than expected build in crude oil stocks.  Gasoline demand came in at 9.207 million bpd.  Distillate demand came in at 4.317 million bpd.  These demand figures were seasonally within normal ranges.  This report, if the figures are borne out by this week’s DOE figures, would be supportive for crack spreads, which have already been strengthening along seasonal lines.  Builds were expected in both products, so the draws were bullish.

DOE Inventory Statistics       for the report released April 28th

Crude Oil open interest rose by 4,755 contracts on Thursday, when prices were higher.  It looks like new buying and is supportive.   

  Heating oil open interest grew by 775 contracts on Thursday, when prices were higher.  That looks like new buying and is supportive.   Managed money accounts continue to be good buyers in this market.

  RBOB open interest fell by 385 contracts on Thursday, when prices were higher, which seems to have been short-covering, which would be negative. 

  Natural gas open interest grew by 28,687 on Thursday, when prices were down substantially (almost 37 cents).  That looks like heavy new selling (hedging) and is bearish.

Crude 1,406,439  up 4,755 Heat 311,853  up 775RBOB 307,267dn 385Nat gas 843,628 up 28,687   

CFTC Commitments of Traders for Nymex (Forensic analysis for the period ended Tuesday, April 27th)
   Crude oil prices dropped $1.41/bbl over the latest reporting period, and the best selling came from Managed Money accounts, which sold 14,438 longs and added 5,651 new shorts.  Swap Dealers liquidated 684 longs and added 8,703 shorts.  Other Reportables were buying into weakness, adding 5,515 new longs and covering 2,363 shorts.  Producers were the best buyers into the weakness, adding 17,737 new longs and covering 1,607 shorts. 

    Managed Money accounts still have the largest long positions, holding 198,047 longs and 51,117 shorts.  Swap Dealers remain long 248,770 longs and short 162,416 shorts.  Producers are holding 252,001 longs and 476,524 shorts.  Other Reportables are holding 76,187 longs and 113,853 shorts. 

    In heating oil futures, prices rallied 5.01 cents a gallon and the best buying came from Managed Money accounts, which added 55,548 longs and 1,914 shorts.  Swap Dealers added 814 new longs and covered 117 shorts.  Other Reportables liquidated 158 longs and added 488 shorts.  Producers added 2,946 longs and added 9,112 new shorts.  Other Reportables liquidated 158 longs and added 488 shorts. 

        Gasoline prices rose 4.59 cents a gallon during the period under review.  Managed Money accounts added 5,194 new longs and added 2,243 new shorts.  Other Reportables added 636 new longs and covered 647 shorts.  Swap Dealers added 586 new longs and covered 5 shorts.  Producers liquidated 24,549 longs and covered 21,342 shorts.    

      In natural gas, prices rallied 24.1 cents during the period under review.  The best buying came from Managed Money accounts, which added 11,420 new longs and covered 19,898 existing shorts.  Everyone else was selling into the strength.  Producers liquidated 6,830 longs and added 2,615 shorts.  Swap Dealers liquidated 13,333 longs and added 2,017 new shorts.  And Other Reportables liquidated 7,391 existing longs and added 2,644 new shorts.  During the decline, everyone buy managed money accounts had been buying; on this rally, the funds were buying and everyone else was selling into the rally.  Trading funds had been riding prices lower, but they were covering at levels under $4.00 on the smaller-than-expected build a week ago and on the decline in the rig count.