Weekly EIA Petroleum & Ethanol Inventory Comment (FULL-TEXT)

Weekly EIA Petroleum & Ethanol Inventory Comment

The EIA headline petroleum data was volatile, as one would expect after one of the more extreme winter weather events seen in some time. Crude Oil stocks added +21.6 million barrels, but each of the products featured massive draws - gasoline down 13.6 million, and distillate off 9.7 million. Net/net, the three major categories declined almost 2 million barrels this week, which was close to analyst estimates. Compared to the year ago week, crude oil stocks are +4.0% higher, gasoline stocks are -3.4% lower, and distillate stocks are +6.3% higher.

The report details featured a nice wk/wk rebound in gasoline usage, while distillate cooled-off. Gasoline product supplied jumped +13% wk/wk, but would still be 11% lower on a yr/yr basis. Distillate usage slipped 4% wk/wk (less heating oil?), and would also be 4% lower than the prior year week. Refiner utilization plummeted to just 56% in use, a whopping 12.6% decline as the storm disrupted operations. Expect this to bounce back sharply. Cushing stocks added half-a-million barrels; at 48.3 million, this compares to 37.2 last year and 47.5 two years prior.

The weekly EIA report featured the expected snapback in ethanol production, as well as a small draw in stocks. Overall, it played-out very close to our forecast. Production surged +22.5% wk/wk to an 849,000 bbl/day rate; on the week, this would yield 250 million gallons of ethanol and consume over 86 million bushels of total feedstock. Note, that this is still ~10% below pre-storm levels. Averaged over a marketing year, such a rate would consume 4.5 billion bushels of corn. There were no imports for a tenth consecutive week. Blender demand jumped 12.3% wk/wk to a two month high. Inventories featured the expected -1.6% draw (we thought down 1-2%) to 22.425 million barrels (942 mil gal). Regionally, ethanol stocks were lower on the consuming Coasts, but were slightly higher in the producing Midwest region.