US Weekly Petroleum Status Report
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US Weekly Petroleum Status Report

The large fall in US commercial crude stocks was mostly due to a renewed rise in exports. Implied gasoline demand rose for a second consecutive week, but this failed to lift prices amid growing concerns over demand prospects. That said, we expect that risks to supply could still support prices later in the year.

Signs of stronger demand failing to lift prices

  • The large fall in US commercial crude stocks was mostly due to a renewed rise in exports. Implied gasoline demand rose for a second consecutive week, but this failed to lift prices amid growing concerns over demand prospects. That said, we expect that risks to supply could still support prices later in the year.
  • The EIA’s weekly US Petroleum Status Report showed that commercial crude oil stocks fell by a chunky 7.1m barrels last week to 425m (see Chart 1), much larger than the 0.4m-barrel drop reported by the American Petroleum Institute yesterday. This came alongside a smaller than usual 3.4m barrel drawdown of strategic reserves, bringing the overall fall in US crude stocks to over 10m barrels.
  • The main reason for the fall in commercial stocks was a 2.9m bpd drop in net imports, breaking the trend from the two prior releases. That was almost entirely driven by a renewed rise in crude oil exports to a record high of 5m bpd. (See Chart 2.) US exports are probably being encouraged by the larger than usual premium of the price of Brent over WTI. Meanwhile, crude production dropped by 0.1m bpd to 12.1m, but inputs to refineries also fell a touch, to 16.4m barrels from 16.6m a week earlier.
  • Another interesting break from the trend in recent weeks was the sharp 5m barrel fall in gasoline stocks. Implied gasoline demand has been particularly volatile in recent weeks, but last week it was much closer to its seasonal average (see Chart 3), probably helped by the recent fall in gasoline prices. (See Chart 4.) That said, we would be reluctant to read too much into one week of data, particularly given recent volatility.
  • This week’s release failed to move prices despite painting a positive picture on demand. Instead, concerns about demand prospects elsewhere, notably in China, continue to weigh on prices. But we expect that a deficit in the oil market balance later in the year, and persistent supply risks, could still give a lift to prices.

Chart 1: Total Crude Stocks (Mn. Barrels)

Chart 2: Crude Imports & Exports (Mn. BpD)

Chart 3: US Retail Gasoline Price (US$ per Gallon)

Chart 4: Implied Gasoline Demand (Mn. BpD)

Sources: EIA, Refinitiv, Capital Economics


Olivia Cross, Assistant Economist, +44 (0)20 7808 4089, olivia.cross@capitaleconomics.com

Olivia Cross Assistant Economist
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