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EIA inventory stats showing same tendency as API, but with less magnitude

By A/S Global Risk Management.



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Updated on 19 Oct 2017 08:57 GMT

By Michael Poulson, A/S Global Risk Management

Yesterday EIA released their inventory stats which showed a draw in crude of 5,7m bbl, a build in gasoline of 0,9m bbl and a build in distillates of 0,5m bbl. The stats from API were: crude draw of 7,13m bbl, a gasoline build of 1,94 m bbl and distillate build of 1,64m bbl.

The build in the product inventory came quite as a surprise as the US refinery utilization rate dropped last week as some refineries were undergoing maintenance. In theory, a lower refinery utilization rate would imply less supply of products, but the inventory stats both from EIA and API showed a build. Some US refineries argued earlier this year that they would not undergo maintenance this fall because Hurricane Harvey forced a lot of refineries to shut down, but the current numbers are contradictory. If the utilization rate continues to decline, or stays at current level, a draw in products can be expected in the weeks to come.

The quite large draw on the crude stocks is likely an effect of Hurricane Nate affecting the US production in the gulf. Nate caused a lot of offshore drilling rigs to shut down, which resulted in a production decline of about 1 mbpd last week. These rigs are likely to come online in the near future and bring US production back to normal levels.

Turning to the situation in northern Iraq. Fights between Iraqi and Kurdish forces caused about 300 kbpd of crude oil not being delivered to the market, which since last Friday likely has had an implication on the Brent price. The situation, in terms of crude oil supply, seems to be stabilizing as the Iraqi forces allegedly took control of the production area and city of Kirkuk. Since the Iraqi forces allegedly took control there are no major fights in the area, and production is likely to return to normal a level.

Yesterday Chinese GDP figures came out showing the expected, still high, growth. Most likely the Chinese growth has concluded in a recently increased crude oil demand.



A/S Global Risk Management is a provider of customised hedging solutions for the management of price risk on fuel expenses. The company has offices in Denmark and Singapore. For further details about its risk management products and services, please call +45 88 38 00 00 or email hedging@global-riskmanagement.com.






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