US Crude Stocks- Up 3.899 MB (Cushing Stocks – Down 0.289 at 29.909 MB)
US Gasoline Stocks- Down 0.692 MB
US Distillate Stocks- Up 1.208 MB
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*EIA: US Total Working Gas In Storage -81 Bcf At 3548 Bcf
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- API reported that for the week ending December 23 crude oil stocks rose a hefty 9.57 million barrels to 339.597 million barrels in contrast to expectations of a draw, reflecting a recovery in gross imports by more than 500 MB/D. Distillate stocks gained 554,000 barrels to 140.158 million barrels, while gasoline supplies increased by 1.859 million barrels. While we would not look for the DOE data to reveal as large a magnitude of build as the API, the numbers probably reflected the recovery of booked volumes that were delayed due to weather problems in the Houston Ship Channel the prior week. Thus, last week’s numbers to be released later this morning may show a large recovery in imports leading to a temporary build, to be followed next week by a sharp drop in imports for tax reasons, leading to the customary net draw in crude stocks for December as a whole. In terms of products, last week we indicated that the bullish data for the week ending December 16 reflected the combination of lower supply and higher demand occurring simultaneously. For the week ending December 23 we have suggested a retracement in both gasoline and distillate implied demand, which would lead to product stats somewhat less constructive than consensus expectations. Part of our reasoning on gasoline was that pre-Christmas secondary stocking would essentially be offset by weaker underlying consumption, but we shall see.
US Crude Stocks- Up 9.57 MB —- Cushing Stocks Down 0.292 MB at 29.905 MB
US Gasoline Stocks- Up 1.859 MB
US Distillate Stocks- Up 0.554 MB
- For the week ending December 23, the latest Platts survey is looking for a 2.3 million barrel decline in U.S. crude oil stocks, a 1.2 million barrel fall in distillate supplies, and a 500,000 barrel drop in gasoline inventories. In the context of our discussion yesterday morning, our expected crude oil stock decline would fall close to consensus expectations. Because we expect some retracement in implied distillate demand back toward our underling mean, we would look for a somewhat smaller decline in distillate supplies than the market is expecting. We are also looking for a modest build in gasoline supplies, but if pre-holiday secondary stocking exceeded our estimates primary inventories could have easily fallen in line with consensus expectations. We note the comparable period last year witnessed a healthy gasoline stock draw, but in general history is not perfectly consistent prior to the Christmas holiday. In addition, underlying gasoline consumption is so weak at the present time the arithmetic suggests it could offset any pre-holiday secondary stocking effect.
Our Iraq theme for 2012 has already begun to unfold, with first the moves by Prime Minister al-Maliki to embark on a partial purge of the Sunni component of the government. Yesterday, 16 bombs exploded in Baghdad killing at least 72 people with no one as of yet claiming responsibility. It is reasonable to assume, however, that the violence was a Sunni response to al-Maliki’s actions.
LONDON (Dow Jones)–Crude-oil futures were mixed Friday, trading in a narrow range, but analysts said they may easily swing up or down in the next few sessions in the thin holiday trade.
| “Given low volumes and the potential interest to mark the end-of-the-year price level, it is going to be difficult to interpret the fundamentals according to the flat price movements over the next five trading days,” Olivier Jakob, managing director of Swiss consultancy Petromatrix, said in a note. |
| At 1113 GMT, the front-month February Brent contract on London’s ICE futures exchange was 11 cents, or 0.1%, down at $107.78 a barrel. The front-month February contract on the New York Mercantile Exchange was trading up 27c, or 0.3%, at $99.80 per barrel. |
| Nymex crude continues to outperform Brent following a string of upbeat U.S. macro-economic news this week. |
| “WTI continues to attack the resistance of $100.00 a barrel, even though using the word ‘attack’ might be a bit strong when volume are so low,” Jakob said. |
| But it is surprising that Brent has shown a much more modest growth than Nymex crude, given Thursday’s bombings in Iraq and media reports that Iran plans to launch a 10-day naval drill in the Strait of Hormuz Saturday, said the Schork Report. |
| “Keep in mind that WTI is priced at Cushing, Oklahoma, a landlocked hub very, very far from Iraq–thus the ARA [Europe's key oil] hub should be more sensitive to [Middle East] turmoil, not less,” it added. |
| The Brent/WTI spread has narrowed to below $8 a barrel, and it is unlikely to widen over $10 a barrel into 2012 as the supply side situation is normalizing for Brent with the return of Libyan oil, while the U.S. Midwest oil glut is dissipating, said VTB Capital’s Andrey Kryuchenkov. |
| At 1113 GMT, the ICE’s gasoil contract for January delivery was up 25 cents at $919.75 per metric ton, while Nymex gasoline for January delivery was 13 points lower at $2.6385 per gallon. |
*EIA: US Total Working Gas In Storage -100 Bcf At 3629 Bcf
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