Inventories Remain at High Levels
November 19, 2020
The inventory report on propane showed a draw of 2.002 million barrels which was mostly the result of exports out of the Gulf. Exports were up 31,000 bpd to a total of 1.224 million bpd. The Gulf showed a draw of 1.944 million barrels to a total 52.168 million barrels which is 964,000 barrels less than last year.
The Midwest had stock up 180,000 barrels to a total of 26.354 million barrels which is 2.980 million more than last year at this time. The situation is much like it seem it has been over the last several years in that is export out of the Gulf continue to be strong then inventories could tighten up and offer some support to prices. But that may take a bit more time for the market to get a sense of that as currently the sentiment is a bit soft and prices have been in a tight range for what seems like months now.
The DOE inventory report called crude oil stocks up 77,0000 barrels and the stock at Cushing, Ok were up 1.2 million barrels and distillates were down a big 5.22 million barrels. Total distillate stocks are at 144.073 million barrels which is 28.392 million barrels more than last year at this time and 24.105 more that the three year average. Distillates stock has decline substantially in the last 9 weeks, roughly 36 million barrels, but are still at high levels and it will take more time to get supplies more into balance.
Total crude stocks are at 489.475 million barrels which is 39.095 million more than last year and still 37.998 more than the 3 year average. Just like distillates crude stocks have falling hard from their peaks as all are working to bring the market more into balance but despite big decline over the last few months, they are still high.
Gasoline total stocks sit at 227.967 million barrels which is 7.121 million more than last year and 9.088 million more than the three year average. Gasoline is the one product that has seen a substantial decline and is getting close to the top of a 3 year average range.
At some point in 2021 these inventory levels will look different and the market will be more in balance. Hopefully in the back half of 2021 because of the vaccine and or vaccines, herd immunity, and or the fact that we are all just sick of this virus demand will see a surge. That will be the start of another bullish market as demand will be ahead of production because all these energy companies reduce capital expenditures, and refineries have been scaled back. Demand will be the key factor to get the markets back to “normal” and when demand returns still appears to be further out in the future.