DOE INSIGHTS September 6, 2018
CRUDE OIL
Crude Oil Stocks Draw, Greater than Expectations

The DOE reported Total Crude Oil Inventories decreased by 4.3 million barrels to 401.5 million barrels for the week ending August 31, 2018, while expectations average was for a 2.4 million barrel decrease. The range of expectations was from a 4.5 million barrel draw to a 1.0 million barrel build.

Overall hydrocarbon supplies increased by 3.6 million barrels to 1,227 million barrels.

Crude Oil Production was unchanged at 11.0 million barrels per day.

Total Crude Imports were up by 200,000 barrels per day to 7.7 million barrels per day.

Total Refinery Crude Runs were up 100,000 barrels per day to 17.65 million barrels per day.

Despite the draw in crude oil inventories overall petroleum inventories increased by 3.6 million barrels so the DOE report was bearish to prices. Prices were relatively unchanged with the release of the report, but then fell by as much as $1.80. Prices then recovered and ended the trading day down by about 80 cents.

Crude oil prices, after failing to break through $72, remain in a trading range of $65 to $71.  A definitive close above $72 would have indicated a sustained bull trend to the upside. With prices range trading we suggest considering long positions when prices approach $65 and short positions when prices approach $71.

(See charts below)

Gasoline
Gasoline Stocks Build. Expectations were for a Draw.

Total MotorGasoline Inventories increased by 1.8 million barrels to 234.6 million barrels for the week ending August 31, 2018, while expectations average was for a 1.0 million barrel decrease. The range of expectations was from 2.5 million barrel draw to a 1.8 million barrel build.

Implied Demand was up by 130,000 barrels per day to 10.9 million barrels per day.

Gasoline Production was off by 20,000 barrels per day to 10.22 million barrels per day.

Gasoline crack spreads have remained strong despite the moves in crude oil prices. We still suggest considering long positions in the out month cracks such as the November or December gasoline cracks.

Distillates
Distillates Stocks Build, Greater than Expectations.

Total Distillates Stocks increased by 3.1 million barrels to 133.1 million barrels for the week ending August 31, 2018, while expectations average was for a 700,000 barrel build.

Total Distillates Production was up 260,000 barrels per day to 5.44 million barrels per day.

Total Distillates Implied Demand decreased by 290,000 barrels per day to 5.28 million barrels per day.

Heating Oil crack spreads have actually widened despite the moves in crude oil prices. We still suggest considering long positions in the out months Heating Oil cracks such as the November or December cracks.

For further information contact joel.fingerman@fundamentalanalytics.comm

 

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