DOE Week of Aug. 17: Mildly bearish on big product builds

  • This report was neutral to mildly bearish in its fundamentals.  The market took the opposite view again, with WTI up nearly $2 / barrel
  • Total inventories, in absolute terms, fell 0.4 mbpd.
  • However, compared to long term averages, total excess inventories rose a stiff 7.7 mbpd
  • By turnover days, excess crude inventories declined again, to 1.9 days above long-term averages.
  • Excess crude and key products (CGD) rose a hefty 5.3 mb to 58 mb by turnover days
  • Refinery runs were just off last week’s all-time record
  • Net crude imports returned to more typical ranges, even as the Brent spread has expanded to near $7 / barrel
  • Net product exports were range-bound
  • Product supplied hit a record for this week of the year at 21.5 mbpd; gasoline demand continues to languish
  • US production was up 1.5 mbpd yoy, 1.4 mbpd / year on a 3 mma basis
  • The single weakness in this report was the large rise in product inventories, whether measured by long-term averages or normalized turnover days.  Notwithstanding, refineries continue to run very hard, suggesting optimism about either domestic or export demand, or perhaps reflecting precautionary inventory in the event of a hurricane strike as we saw last year.  A wide Brent spread suggests net crude imports will be low.