Big Draw In DOE Fuel Inventory Sends Bullish Signal
September 2, 2021
The big number from the DOE inventory report was the 7.169 million barrel draw to crude supplies when the market estimated a 2.879 million barrel decline. This is a bullish number but OPEC+ agreed to stick to their plan which means they will add an additional 400,000 BPD to production, which tempered the bullishness. Also from the DOE inventory report was strong implied demand for both gas and diesel. Total implied demand for gas and diesel was a new record high of 22.8 million BPD. I guess the recovery from the pandemic has been strong. Now weekly numbers can be overstated but either way it does show that we have come a long way from the early days of the pandemic.
Damages to refineries continue to be assessed and the lack of electricity will make their return take more time. Reuters reported that 7 Gulf Coast refineries could be out of operations for up to 4 weeks due to a lack of power and water.
The DOE Inventory had crude down 7.17 million barrels and Cushing stocks were up 836,000 barrels. Gasoline stocks were up 1.29 million in a bit of a surprise and distillates were down 1.73 million barrels.
Propane stocks were up just 533,000 barrels with the Midwest stocks up 1.060 million barrels and the Gulf Coast down 544,000 barrels. Total US stocks sit at 69.282 million barrels and this market needs some builds in September to get ready for winter demand.
The market continues to be uncertain with no trend, and it reacts to headlines and technical factors. This will continue as the market tries to sort out the multitude of issues currently.