EIA PSR Week of June 30: Chugging along, with signs of life in aviation

  • Excess crude inventories, as measured by seasonally-adjusted days of turnover, have been rising, up 4 mb to 22 mb

  • Product inventories on a seasonally adjusted days of turnover basis fell 5 to -11 mb

  • Crude and key product inventories, taken together, are down marginally to +9 mb.  

  • SPR draws continue at 208 kbpd this past week.

  • Except jet fuel, demand remains range-bound

    • Gasoline demand is 3.3% below normal

    • Distillate had a bad week, but primarily due to base year effects

    • Jet fuel has its best week since the start of the pandemic, down only 3.4% below normal after averaging 10% below normal since the start of the year

  • US crude and condensate production has been bouncing around in the low 12s, 12.4 mbpd this past week, supporting the notion that US oil production has peaked

  • Oil prices remain range-bound, as they have since the beginning of May

    • WTI stands around $72 with Brent at $77, in fact their average price over the last twelve weeks

    • Our Incentive to Store analysis suggests that the market anticipates normal balances for the rest of the year, essentially a business-as-normal scenario, notwithstanding mooted Saudi production cuts

  • Finally, it is hard to avoid the impression that the Ukraine war has adversely affected US oil consumption.  

    • Gasoline consumption is about 4% lower than immediately prior to the war

    • Distillate consumption is off more than 10% compared to the pre-war period.