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Open Insights: EIA’s Weekly Petroleum Report (11/17/17)

Continuing our weekly series, Open Insights, we’ll take a look at the EIA’s Weekly Petroleum Status Report (WPSR) for the week of Nov. 17, 2017.

EIA today reported a crude draw of 1.9M barrels. Effectively negating last week’s build of 1.9M barrels. Crude inventories are currently facing a few headwinds, first is the previously announced sale of oil from the Strategic Petroleum Reserve, which is now (if not already) in earnest (14M barrels in fiscal year 2018, which began on Oct. 1, 2017). SPR released 1.8M barrels last week, more than double the prior week. If we include October to today, SPR has destocked by over 6.1M barrels. September itself included a destocking of 5.2M barrels, but this was related to Hurricane Harvey and needs to be returned to the SPR.

Moreover, October amounted to 3M, but some part may be attributable to Hurricane Nate. So if the SPR will sell 14M barrels, but the industry needs to return at least 5M barrels it borrowed in September, we should see SPR releases from October on to total a net release of 9M barrels (14M to be sold minus 5M returned). We have 6M released in October thus far, so another 3M barrels to go. That’s the base assumption (and assuming that Hurricane Nate did not draw any SPR barrels out of storage). The timing of the above is uncertain, but overall that’s how the math works.

The second headwind is exports, which dipped below our expectations the last two weeks, but vaulted higher this week from 1.13M bpd to 1.59M bpd. Looks like they found some ships. Again the WTI/LLS/Brent spreads remained healthy last week, and we continue to anticipate US inventories to be drawn out of storage for export.

Based on EIA’s WPSR models, US domestic production increased to 9.658M bpd (again this is on autopilot and we’ll have better insight into the “accuracy” of this figure once the PSM reports are released).

Refinery utilization increased by 0.3% and averaged 91.3% for the week, again higher than the 5 year average (2012-16) of…

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