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

Weekly EIA Petroleum & Ethanol Inventory Comment 

The EIA headline petroleum data had a lot of ground to cover, as it included two weeks of statistics. Crude Oil stocks fell 9.7 million barrels this week, much of it due to a 7 million barrel pull out of the SPR (so commercial crude stocks were -2.8 mil lower versus an -0.4 mil draw last week). Gasoline stocks were +2.6 million higher (last week was +1.5 mil higher), and distillate stocks were also +2.6 mil higher (last week was near flat). Netting that out, commercial stocks were about 2.5 million higher this week (after rising about 1 million the prior week). Compared to the year ago period, crude stocks are 15% lower, gasoline stocks are 8.3% lower, and distillate stocks are down 18%.

Eyeing the report details, demand was generally poor. Gasoline product supplied improved 5% off a low base from the prior week but would still be 3% lower than year ago. Distillate usage slipped 10% wk/wk and was more than 20% below year ago. Despite the soft demand, refiner activity added +1.3% to 95% in use - a very high level. Crude Oil production inched a little higher wk/wk, and would be not quite 10% higher than the year ago period. Cushing stocks slipped -0.7 mil bbl to 21.3 mil, which compares to 40.3 at that hub last year.

The ethanol section of the report was harder-to-judge; moving in the right direction, but perhaps not as much as bulls would like to see. Ethanol production inched a little lower both weeks, declining roughly -0.5% each time for a cumulative decline over two weeks just shy of -1%. The resulting 1.051 mil bbl/day rate would yield 309 million gallons of ethanol, consuming 107 million bushels of total feedstock. Over a corn marketing year, such a rate would utilize nearly 5.6 billion bushels of corn. Ethanol imports remained at zero. Blender demand was a little disappointing, inching higher both weeks for a cumulative improvement of less than +1%. Perhaps most importantly, ethanol stocks featured a nice draw this week of -3.1% (after building about 1% the prior week) to roughly 953 million gallons. Regionally, stocks were higher on the East Coast, lower at the Midwest and Gulf Coast, and unchanged on the West Coast.

KJ