NYMEX WTI prices rose above US$80/bbl yesterday as the EIA inventory report showed a large drawdown for products, raising hopes for strong fuel demand for the upcoming driving season in the US. Saudi Arabia’s recent move to increase its official selling price for oil, along with OPEC+ members’ agreement to extend the supply cuts until mid-year, is also supporting the current uptrend.
The EIA’s weekly US inventory report for the oil market was somewhat bullish yesterday. US commercial crude oil inventories (excluding SPR) increased by 1.4MMbbls for the week ended on 1 March 2024 amid recovering refinery runs. The market was anticipating an increase of around 1.7MMbbls, while API reported a build of just 0.4MMbbls. When factoring in the SPR, the build was higher, with total US crude oil inventories increasing by around 2.1MMbbls. Total US commercial crude oil stocks now stand at 448.5MMbbls, around 2% below the five-year average. Meanwhile, oil inventories at Cushing, Oklahoma, increased by 0.7MMbbls to 31.7MMbbls. Crude oil imports from the US increased by 0.84MMbbls/d to around 7.22MMbbls/d over the reporting week.
In refined product inventories, stocks of gasoline and distillate fuels decreased more than expected on rising fuel demand as the country heads towards the summer driving season. Gasoline inventories fell by 4.5MMbbls, against a forecast for a drawdown of 1.1MMbbls. Distillate stockpiles also fell by 4.1MMbbls last week, much higher than the expectation of a decline of just 0.3MMbbls. Meanwhile, refineries operated at 84.9% of their capacity following the restart of several refineries that completed maintenance, up from 81.5% in the previous week but 1.1% lower than the same period last year.
Meanwhile, recent trade numbers from China show that crude oil imports in the country rose 3.3% YoY to 10.74MMbbls/d over the first two months of 2024. However, the overall buying trend remains soft as the purchases were lower when compared to imports of 11.39MMbbls/d in December. China has been slowing its overseas purchases primarily due to slowing demand from refineries, weak economic indicators, and higher inventories.
Data from India’s Petroleum Planning & Analysis Cell (PPAC) show that oil product consumption in February rose 5.7% YoY to 19.7mt. This was led by strong gasoline consumption, which rose 8.9% YoY to 3mt, while distillate demand also rose by 6.2% YoY to 7.4mt in the last month.
