Crude inventories declined this week
Excess crude inventories, as measured by seasonally-adjusted days of turnover, have fallen by 26 mb since early March, now only 16 mb
Product inventories are normal
Crude and key product inventories, taken together, have fallen by 30 mb since early March as measured by seasonally-adjusted days of turnover, and now stand at only 3 mb, which is effectively nothing in practical terms.
SPR draws continue at a pace of 150 kbpd this past week
Total, diesel, gasoline, and jet fuel supplied (consumption) all look good by recent comparisons, particularly jet fuel and diesel (distillate)
There is no recessionary signal in the US data today
US crude and condensate production fell by 0.1 mbpd to 12.2 mbpd, materially unchanged in the last ten months
Oil prices have fallen back despite OPEC production cuts
Oil prices have a distinct recessionary feel. Flat US oil production, OPEC production cuts, solid US oil demand and ostensibly recovering Chinese demand should be notably bullish for oil prices
Clearly, this is not the case and suggests weakness either in the financial demand for oil futures or weak physical demand for crude oil
Notwithstanding, our incentive to store analysis continues to show normal supply/demand balances for crude oil into the second half of the year, which should be constructive for oil prices
Perhaps tepid pricing is merely a passing blip, but it could also represent a financial crisis in the works or a Chinese economy not as strong as commonly thought