CRUDE: OK, I was wrong. Actually I think I’m only a week off on my timing because this week’s BUILD (+2.1M, 379.7) wasn’t all that bullish when you break out the stats. Where I did miss was on the RUNS/UTIZ (-79, 15.129; -0.1, 86.6). We’re stopping the slide here and from the news I’m seeing, we’ll be back on track come next week. Now when we look at this build, it’s noteworthy to see that the big build in crude came on the West Coast in PADD5 (+1.7M). Not that we’re discounting anything, anywhere ( I hate that), but we have to make sure we understand that the only areas that are still bringing in IMPORTS (-376K, 7.101) are PADD2 (Canadian) and PADD5 (Saudi, Ecuador, Iraq). This is a pretty telling tale of what I’ve been preaching, the more we see DOMESTIC PRODUCTION (+36K, 8.970), the more we shut the door on OPEC. This is also going to eventually make CUSHING (+800K, 21.3) irrelevant as a place to measure benchmark since it’s all about what’s coming in, what’s going out and where it lands…storage levels are useless.
GASOLINE: And that’s what I get for trying to be cute. I missed this DRAW (-1.2M, 203.1), but if only this were checkers or hand grenades. The PRODUCTION (-81K, 9.467) slipped a little and as well it should have. We’re running pretty short on distillates and with gasoline prices so low, we can afford to let that rise on smaller inventory. We will though have to pay attention to the fact that DEMAND (+31K, 8.867) is not going anywhere anytime soon. The weather has been good and the outlook for the consumer is looking confident. We’re going to be getting a healthy does of miles on the road this Winter. I’m thinking that soon enough we’re going to see a need to increase IMPORTS (+55K, 493.0) a lot more to make sure we’re able to not crimp the holiday cheer.
DISTILLATE: Then there’s the coup de grace; a huge DRAW (-5.3M, 120.4). The appropriately scary thing is that this number includes a -5.6M barrel draw of ULSD (<15ppm). I know I have been thinking about a strong season of consumption, travel and manufacturing, but the DEMAND (+617K, 3.926) is looking like it’s off to a hot start. We know that there’s a lot of volatility in the EIA numbers for this demand week to week, but a lot more of it has to do with EXPORTS (+53K, 3.607). Of that jump in the export number, we saw the jump in distillates (+107K) to a record 1.341M b/d. That’s going to keep the impetus on more PRODUCTION (-133K, 4.471) as refineries come back from turnarounds.