Open Insights: EIA's Weekly Petroleum Report (07/26/19)

|
Includes: BNO, DBO, DTO, DWT, NRGD, NRGO, NRGU, NRGZ, OIL, OILD, OILK, OILU, OILX, OLEM, OLO, SCO, SZO, UCO, USAI, USL, USO, USOD, USOI, USOU, UWT, WTID, WTIU, YGRN
by: Open Square Capital
Summary

We review EIA's Weekly Petroleum Status Report for the week of July 26, 2019.

Crude inventories fell by over 8.5 million barrels, while production recovered from hurricane-affected flows to 12.2M bpd.

Both crude and products drew for the week, but little of the fundamentals mattered as oil sold off on news of additional US tariffs on Chinese goods.

Continuing our weekly series, Open Insights, we’ll take a look at the EIA’s Weekly Petroleum Status Report (“WPSR”) for the week of July 26, 2019.

EIA reported a crude draw of 8.5M barrels for the week, a cleaner week as the impact of Hurricane Barry faded. Both imports and exports decreased, with exports falling more, resulting in an increase in net imports of 353K bpd.

Refinery utilization dipped slightly by 0.1%, but should increase overall in August as we typically expect to see a seasonal spike ahead of Fall maintenance.

Compared to 5-year averages, this week’s report was bullish for crude and bearish for petroleum products. Let’s just go through the charts quickly.

Gasoline and distillate inventories decreased by 1.8M barrels and 900K barrels, respectively, both better than their 5-year averages. Total products decreased by 1.6M barrels, largely thanks to product exports that increased by over 1M bpd. Builds in Other Oils tempered the products draw.

Overall total crude and products declined this week thanks largely to the crude draws. In total, crude and petroleum products declined by 10.1M barrels for the week.

As always, we’ll leave you with some food for thought.

Not that any of these fundamentals matter today, as oil has cratered in the past few days, suffering further carnage on Monday as the entire market free-falls after US/China trade negotiations run amok. About the only thing we hear today are the cries of falling demand. There’s no way oil prices increase at this point because the global trade war ensures demand will decline. This is a certainty, so take your fundamental data, and well, go pound shale sand, or that's what the market is saying. Yet on days like this, days when the doubts surrounding global demand growth get louder, and everywhere you look is another sell order, we think about this chart. This is year-over-year growth of oil demand over the past 19 years. Quite simply, it’s relentless. We think Kyle Reese in the Terminator was describing oil demand as opposed to a cybernetic robot when he said, “Listen, and understand! That Terminator is out there! It can't be bargained with. It can't be reasoned with. It doesn't feel pity, or remorse, or fear. And it absolutely will not stop . . . .” So growth in oil demand? Yeah, it's basically that. Do with that knowledge what you will. Today and perhaps even tomorrow, it just doesn't matter, but it will.

As always, we welcome your comments. If you would like to read more of our articles, please be sure to hit the "Follow" button above.

Disclosure: I/we have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.