Crude Oil Inventories Report

Oil remains mostly coupled to the direction of the U.S. dollar and the euro and will remain in this pattern for the foreseeable future or until Europe moves into the background, which does not seem like it will happen anytime soon. As such it is uncertain if many market participants are going to pay much attention to this week’s round of oil inventories data as Europe and the U.S. are still in the midst of uncertainty, suggesting that this week’s oil inventory reports may not have a major impact on price direction. At the moment all market participants are continuing to follow the tick-by-tick direction of equities and the U.S. dollar (driven by Europe), as they are both the primary price drivers for oil. Even with the fundamentals and geopolitics starting to impact price it is the macro trade that dominates at the moment. The normal weekly reports get underway this afternoon when the API data will be released, followed by the more widely watched EIA data on Wednesday morning.

Projections for this week’s inventory reports are summarized in the following table. We can expect:

  • Mixed inventory data with a small increase in refinery utilization rates, which should result in a neutral weekly report
  • A modest draw in crude oil stocks with an increase in refinery utilization rates
  • A modest build in gasoline inventories and only a small draw in distillate fuel stocks as winter weather has still not arrived in most parts of the U.S., especially the large heating oil market along the north east.

If the reported numbers are in sync with projections, the year-over-year deficit of crude oil will narrow to about 8.2 million barrels while the overhang versus the five-year average for the same week will come in around 10.4 million barrels.

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About JWM Energy Consultant
Professional Energy Consultant. I advise large energy-users on procurement strategies to reduce electricity and natural gas costs.

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