DOE Week of Aug 10th: Bullish

  • This report was bullish in its fundamentals.  Like last week, the market hated it.
  • Total inventories, in absolute terms, rose 2.5 mbpd, the biggest weekly gain in our series.
  • However, by turnover days, excess crude inventories declined to 2.1 days above long-term averages, with a clear peak showing, as we anticipated.
  • Excess crude and key products (CGD) rose 3 mb to 53 mb by turnover days, moderately bearish
  • Refinery runs set a new all-time record just below 18 mbpd.
  • Net crude imports were very high, probably due to timing of off-loadings.  Note, however, that despite net crude imports running more than 1 mbpd over recent averages, excess crude inventories by days declined.  This is very bullish, as it suggests US refiners anticipate strong refined product demand, either domestically or via exports, even as their crude inventories are running quite tight.  With the Brent spread moving up to $6 / barrel, this is markedly bullish.
  • Crude exports were notably soft.  Next week should be better.
  • Net product exports were strong, but not unprecedented.
  • Product supplied was weak and gasoline supplied was very weak.  More and more, the data suggest that the US consumer has hit a tolerance limit around $65 / barrel WTI.
  • US production was up 1.4 mbpd yoy, 1.1 mbpd / year on a 3 mma basis
  • This report does not underpin oil price weakness visible in the last ten days or so.  Such weakness is more likely related to global demand, as Trump administration tariffs may be precipitating an economic crisis in the emerging economies.  More in the body of the report.