DOE Insights March 4, 2020
Crude oil price moves are in reaction to headlines. Tuesday morning crude prices jumped following the announcement that the Federal Reserve cut its target interest rate by 50 basis points, but fell back in afternoon trading. Traders appear more concerned about the impact on crude oil demand resulting from the global spread of COVID-19. There are OPEC and OPEC+ meetings scheduled for Thursday and Friday. Last month the OPEC+ Joint Technical Committee proposed deepening cuts by another 0.6 million barrels per day in the second quarter, and Saudi Arabia is recommending a cut of 1 million barrels per day to support prices.
Gasoline Stocks Draw, Greater than Expectations
Total MotorGasoline Inventories decreased by 4.3 million barrels to 252.0 million barrels for the week ending February 28, 2020. The expectations average was for a 2.1 million barrel decrease.
Implied Demand increased by 300,000 barrels per day to 10.9 million barrels per day.
Gasoline Production was down 40,00 barrels per day to 9.76 million barrels per day.
Despite the fact that gasoline stocks have seasonally peaked and demand has returned, crack spreads have weakened during this volatility price period.
Distillates Stocks Draw, Greater than Expectations
Total Distillates Stocks decreased by 4.0 million barrels to 134.5 million barrels for the week ending February 28, 2020, while the expectations average was for a 1.9 million barrel draw.
Total Distillates Production was down 200,000 barrels per day at 4.65 million barrels per day.
Total Distillates Implied Demand increased by 20,000 barrels per day to 5.35 million barrels per day.
Heating oil cracks have been falling since early January. They also took a hit with the collapse of crude oil prices and now appear that the cracks can recover.
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The Fundamental Analytics Team