The latest Platts survey is looking for a 1.9 million barrel build in crude oil stocks, a 1.0 million barrel fall in gasoline supplies, and a 1.0 million barrel increase in distillate inventories. Our cursory cut at the numbers for crude oil would suggest largely unchanged refinery runs as autumn turnarounds continue. Domestic crude oil production is pegged at about 5.5 MMB/D, while gross imports should have fallen off from the prior week and reverted to our estimated underlying mean. We would estimate gross imports fell back to average around 9.5-9.6 MMB/D from the near-9.9 MMB/D average of the week before. Adding up all components would suggest a crude oil stock build a bit less than consensus expectations.
The latest Platts survey is looking for a 1.1 million barrel build in crude oil stocks, an 875,000 barrel increase in gasoline supplies, and a 950,000 barrel increase in distillate inventories. Taking a look at our guesstimates for crude oil, we have assumed a modest reduction in refinery crude oil runs for the week ending August 20, with gross imports rebounding to a degree. Assuming domestic crude oil production averaging around 5.35 MMB/D last week, our calculations would still suggest a crude oil stock build less than consensus expectations.
With regard to refined products, implied gasoline demand is estimated to have eased slightly last week and revert to our estimated underlying mean. Refinery production of finished mogas declined in tandem with our estimated run reduction, while gross imports of total gasoline should have fallen back a bit below 1.0 MMB/D due to the closing arb, unless there was a greater lagged effect from hedged European cargoes than we have assumed. The combination of inputs would imply a smaller gasoline stock build than the market is looking for. Finally, for distillate fuel oil once again the key will be implied demand, which we have assumed eased a bit from the prior week. We are not suggesting we have modified our assumptions with regard to manufacturing activity; our models simply suggest that a modest retracement in demand from the prior week would imply a reversion to our estimated mean. With refinery output and gross imports of distillate both off modestly last week and assuming gross exports averaging around 600 MB/D, our numbers would still suggest a distillate stock build modestly exceeding analysts’ expectations.
LONDON—Oil futures edged higher amid gains in European equity markets, although the move was subdued by a softer euro.
Crude benchmarks have recovered from the six-week lows seen Friday, but the market looks directionless on a quiet day for economic data.
An Atlantic tropical storm called Danielle could strengthen into a hurricane by Tuesday, the National Hurricane Center warned, but the chances are slim that it will veer toward the oil-producing region of the Gulf of Mexico.
“Danielle is carrying sustained winds of 40 miles per hour, but as of now, it is posing no threat to energy assets and is expected to curve northwards and onto the open seas later in the week,” pointed out Ed Meir, an analyst at MF Global.
The front-month October Brent contract on London’s ICE futures exchange recently was 33 cents higher at $74.59 a barrel. The front-month October contract on the New York Mercantile Exchange, called West Texas Intermediate, was 24 cents higher at $74.06 a barrel.
The ICE’s gasoil contract for September delivery was $1.25 higher at $631.50 a metric ton, while Nymex gasoline for September delivery was 0.39 cents up at 192.90 cents a gallon.
Prices have been under pressure over the last two weeks as concerns about faltering economic growth, initially triggered by downbeat comments from the U.S. Federal Reserve and compounded by U.S. crude and oil-product stockpiles reaching record levels.
But stockpiles also are expanding beyond the U.S., the world’s largest oil consumer.
“OECD stock levels are at 61 days of forward cover and judging by the latest numbers they are not expected to fall significantly over the winter,” pointed out London brokers PVM.
China’s commercial crude oil stockpiles also rose 1.3% by the end of July compared with the previous month, the state-controlled Xinhua News Agency reported Monday. This brings them to a fresh high this year of 29.2 million tons, or around 214 million barrels.
Meanwhile, last week’s fall in oil futures coincided with speculators exiting long oil positions in both the main exchanges, analyst noted.
Money managers, including hedge funds, cut their net long position in Nymex crude-oil futures by 16% to 108,874 in the week ended Aug. 17, according to data released Friday by the Commodity Futures Trading Commission.
Money managers also cut their net long positions in Brent futures on the ICE exchange to 2,560, down from 7,420 from the week before.
The American Petroleum Institute and the U.S. Department of Energy will release weekly oil inventory statistics Tuesday and Wednesday respectively. There also is a slew of economic reports from Tuesday onwards, culminating in a second estimate of second-quarter U.S. growth on Friday.
DOW JONES NEWSWIRES
| Tropical Storm Danielle has formed in the eastern Atlantic Ocean, the U.S. National Hurricane Center said on its website Sunday. |
| The fourth named storm of the Atlantic hurricane season, Danielle was located about 725 miles west of the southernmost Cape Verde Islands, with maximum sustained winds of 40 miles per hour, the NHC said in its 5 p.m. EDT (2100 GMT) advisory. |
| The storm is moving toward the northwest at 12 mph, with a turn to the west-northwest expected later Sunday, the NHC said. Danielle could be near hurricane intensity by late Tuesday, the NHC said. |
| Full report at http://www.nhc.noaa.gov/text/MIATCPAT1.shtml |
Hornsby Trading News
- Platts Energy Inventory Survey Plus Hornsby & Company Inventory Assessment – February 7th.
- US NATURAL GAS INVENTORY SURVEY: Draw Of 126 Bcf Expected – Dow Jones
- Weekly DOE Inventory Report – February 1st.
- API Inventory Report – January 31st.
- Platts Energy Inventory Survey Plus Hornsby & Company Inventory Assessment – January 31st.