EIA PSR Week of May 26th: Party on

  • Excess crude inventories, as measured by seasonally-adjusted days of turnover, fell 2 mb this week to 5 mb.  There is materially no excess crude inventory and trends are constructive overall.

  • Product inventories on a seasonally adjusted days of turnover basis fell 4 to -7 mb

  • Crude and key product inventories, taken together, are down 5 mb to -6 mb.  Overall, crude and key product inventories together are a bit tight, supportive of prices around the $80 WTI range

  • SPR draws continue at 360 kbpd this past week.

  • Demand continues to hang in there

    • Gasoline demand is 2% below normal, but about the best this year on relative terms

    • Distillate is normal, and again about the best in relative terms this year

    • Jet fuel remains 9% below normal, but showing a gradual normalizing trend

  • US crude and condensate production fell by 0.1 mbpd to 12.2 mbpd, unchanged in the last six months

    • US oil production has peaked

  • Oil prices have tanked once again

    • Once again, this panic is unsupported by incoming US data.  By implication, though, China is struggling, which is also much discussed in the press

  • As have been typical in recent months, both recessionary and expansionary signals are evident in the economy, and it is not clear which will dominate.  As far as the US weekly oil data is concerned, however, the party is still on.