US Crude Stocks- Down 10.87 MB (Cushing Stocks – Down 0.99 at 30.198 MB)
US Gasoline Stocks- Down 0.421 MB
US Distillate Stocks- Down 2.352 MB
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The NYMEX may take some form of cue from the weekly DOE data due out tomorrow, but we sense the numbers would have to be a complete shock in either direction to provide any form of sea change in sentiment. The latest Reuters poll is looking for a 1.5 million barrel fall in crude oil stocks, a 1.1 million barrel increase in gasoline supplies, and a 100,000 barrel gain in distillate inventories. When we take a look at crude oil for the week ending May 27, we expect a modest uptick in refinery crude oil runs combined with a modest falloff in gross imports. Our arithmetic would imply a stock draw somewhat larger than consensus expectations. For gasoline, we expect implied gasoline demand to have been about steady with the prior week at 9.0 MMB/D or so, while refinery production increased on a seasonal basis. However, given the high level of gross imports for the week ending May 20, we would expect a significant falloff in gasoline imports to have occurred last week. The net result, however, is a gasoline stock build greater than market estimates. Finally, for distillate the key once again will be implied demand, which recovered to almost 4.0 MMB/D for the week ending May 20. As previously discussed, the recovery “normalized” inordinately weak demand reported for the previous couple weeks, thus suggesting that it would be premature to assume a material slowdown in manufacturing growth at this time. Nonetheless, we would look for implied demand to fall back once again, but still average around 3.7 MMB/D or so to avoid raising any flags again. Assuming roughly steady supply, yet one more time we would look for a stock draw in contrast to consensus expectations of a build, but relatively small in magnitude as we approach the inflection point when stocks begin to seasonally increase once again.
