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Weekly Oil Storage Report - Stay Focused


  • This week's EIA oil storage report was neutral.
  • Crude storage saw a build of 2.408 million bbls versus our last week's estimate of +2.6 million bbls.
  • Gasoline was the standout bearish storage change this week with a decline much smaller than historical averages.
  • Adjustment factor flipped massively negative. Our trued-up US oil production for February shows 10.195 million b/d.
  • With Q1 coming to an end soon, we need to remain focused. How we end Q1 will set the precedence for how oil storage develops throughout 2018.

Welcome to the weekly oil storage report edition of Oil Markets Daily!


This week's EIA oil storage report was neutral.

Total liquid stockpile saw the same change versus the 5-year average.

Crude storage saw a build of 2.408 million bbls and in-line with our last week's estimate of +2.6 million bbls. The crude storage change came in below the five-year average and over the last 3 years, this week has been one of the largest builds during the refinery maintenance season.

The important variable out this week was the negative adjustment of 570k b/d. This was an 822k b/d difference from last week's +252k b/d. This pushed trued-up US oil production to 9.799 million b/d from 10.535 million b/d. The week-over-week volatility is apparent, but we use this to gauge what the average monthly US oil production is. Now that we have February data, we show US oil production coming in at 10.195 million b/d in February.

This is ~104k b/d below the weekly US oil production estimate of 10.298 million b/d.

Cushing storage dropped 605k bbls week-over-week, and storage is now sitting at 28.18 million bbls.

Gasoline storage change came in bearish with only a drop of 788k bbls versus the -2.651 million bbls for the 5-year average. All eyes will be on gasoline storage change in March. We think if bearish gasoline storage continues, gasoline crack spreads will come under pressure forcing refinery maintenance into March from the scheduled April and potentially push crude storage higher (via lower refinery throughput).

Distillate storage change also came in lighter than the 5-year average, but total storage is right at the 5-year average.

Refinery throughput came in higher w-o-w versus our estimate for a decrease.

Crude imports jumped by more than 721k b/d, but according to the third-party tanker tracking services

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This article was written by

HFIR profile picture
HFI Research is focused on investment ideas within the energy sector. The goal is to find contrarian opportunities in the oil and natural gas markets. Members of the investing group Learn more.

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Comments (81)

we touched 58.07ish not long ago.... we have to sweep below that 55ish. then we will see.. saudis may push their ipo till 2019...OMG!!!!!!!!!!!!!! things that make you go hmmmmmmmmmm
Tried to warn the oil bulls...the worst has yet to come...$45 by July
Bulls were being warned of $20 oil last July.
I was warning at $66
HFIR was predicting a pullback as well due to refinery maintenance season.
I've great info thanks!
This week Anne and DHT Tiger are loaded with 1 MM barrels each of US crude. Chloe is getting started to fill. Maran Taurus arrived empty yesterday and Basra today-presumably to pick up US crude. This will impact US crude build along with Motiva starting up.
Kxviswan more likely filled with shale condensate. A distinction without a difference I suppose. Unless your a refiner wanting to produce gasoline.
Erratic trading today, transfer of wealth from the weak to the strong hands.
I am reasonably sure that 2 full VLCCs were counted in imports last week. This week import will dip down. These VLCCs are still full but they are customs cleared and counted in crude inventory and elevated the crude inventory.

I am expecting exports to be 1.8 MM barrels/day as I see at lease 2 VLCCs getting with filled for export.

I am expecting a bigger draw to the tune of 2 MM barrels.

Motiva is starting up and by next week will be fully operational at 603K/day crude handling capacity. That sucks up crude at the rate of 4.2 MM barrels/week.

So far the crude build is only a PADD3 phenomenon. PADD3 has built crude by 25 MM barrels since December 29.
OrangeElvis profile picture
Kxv - man, I am following you! That is some kick butt info. Any idea if those VLCCs are getting filled will crude - or is it possible it could be gasoline? Rookie shipping question...
No, these are dirty tankers and they cannot be filled with gasoline. It is getting filled with US crude.
Thanks for the great info. I often check your tweets and really appreciate your insight. Do you think the PADD3 build is due to poor infrastructure bottlenecking the flow of exports out/imports to final destination, lack of appetite for the API or something else entirely?
pschmitz41 profile picture
These reports keep getting better!....Although, now that I am behind the wall - I knew all this already!!
thanx shark........ i was trained in high risk cardiovascular anesthesia. did a lot of deep circulatory arrests which means we cooled you way down and turned off the pump. you were clinically dead for 45-60 min. this allowed heart surgeon to be able to operate and replace your aorta and you wouldnt bleed. clean surgical site. . then we would warm you back up and usually all hell would break loose for awhile.the night before one of these id set down with a bourbon and close my eyes. id see a 12 hr surgery in my mind in about 15 minutes. i always wanted to think about what am i missing or under estimating that can blow me out of the water. we started these with 6 units blood in the room . usually needed a lot more . platelets and blood factors.. but what am i missing? i like HFIR reasoning but i still stop and think what could blow me out of the water.? retired.
caracer profile picture
@chezjonz Thankful for guys like you. I was the guy on the table 4 years ago. Aorta valve replaced. Also glad I did not know how cold I was. I hate the cold. (:<)) Good for another 20 or so I hope.
OrangeElvis profile picture
Cool story. Always prudent to try to turn things around and look at it from a very different perspective. As to "what ifs", one can get wrapped around the axle pretty quick unless you put boundaries up that preclude extremely unlikely events - like a blockade of the Strait of Hormuz, Israel nuking Iran, someone inventing a breadbox sized cold fusion device that costs less than a $1,000, etc.

With that said, I do not think a ramp up to 12 mbd is possible for several reasons - but all of them of the "bottleneck" variety. Drop off in demand is certainly possible but there is zero evidence of there being a cause for such a concern. HFIR has been wrong - insomuch as he was early - but he owns it and moves on. Like so many things, it is darkest just before the dawn and buying a beat-down sector at the "right time" is about as fun as cutting out an ingrown toenail yourself - scary and painful as hell when you are doing it, but so much better later...
i also believe in the bottle necks theory.. the boys in the permian etc have to believe they will be there for quite a while to really get behind infrastructure. i dont think shale will be the final answer.
im trying to find the scenario that in 4-6 weeks HFIR you straight out say :we were wrong". this and this and this happened that we didnt see coming. ie no one is driving and gas stockpiles up. production through the roof and we wil hit 12 mil bpd this year. etc. when i read this piece it says to me that our idea and thesis is correct but it could take another month or so to get here..and start from oil =57 .not 62.

No question you scenario could play out. But per HFIR article - watching the Export/Import ratio and refinery throughput will give us a significant clue. For me, its all abut the imports (I think exports could surprise to upside by a little). If Imports fall per HFIR's prediction, it will be very supportive of prices...however, its been higher Imports than predicted that have been hurt bull thesis's the last two years...next few reports are critical...

Flash Crash Gordon profile picture
Exports likely to fall in coming weeks based on price differentials.
article today europe using less diesel . could be a new place for our light sweet crude since it doesnt make much or 0 diesel from it..
Flash Crash Gordon profile picture
Incorrect. Plenty of diesel in our crude.
OrangeElvis profile picture
I have read differently. Perhaps "plenty" doesn't mean what you think it means?
my bad...... true. light sweet high api doesnt have something and im drawing a blank.i know refineries in usa dont use it well. what is bad about lls>dam
Great report as always. Thank you.
Ruben123 profile picture
Thanks for outstanding work HFIR team..great information every week. I am already looking to April when inventory draw will start. Another situation that nobody talk is Iran sanction. In Jan 15, Trump said that it was his last extension. it is likely that he keep his word.
Flash Crash Gordon profile picture
Not in April. Maybe May.
Ruben123 profile picture
april 15 i believe!
That's a lot of work to share. Thanks.
River18 profile picture
Great report. Thanks.
InvestLT profile picture
Heard from a Canadian analyst on cnbc that alberta has 35mm barrels l of bitumen stored, up from 3mm barrels. If keystone was running that would have shown up on cushing..so we have to add the 35 from canada to get the right picture.
Elinor B - - You got that right !

Also numbers change so fast.
OrangeElvis profile picture
I wonder if our gasoline exports may increase...? API showed a big gas draw - could that show up in next week's EIA?
Enjoy your write ups. A few things on your US oil production growth. Since most of 1 million bbl increase is coming from Permian, there maybe transportation issues to transport that additional crude. There may also be crew issues to staff the additional wells that need to developed.
my gut tells me that we have to get smacked around one more time before oil can move up.... we touched under 60 recently .ill say 58 handle and a few cnbc idiots saying 40s are coming back.. ill lift off my calls
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