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OIL INVENTORY INDICATORS
Key observations
q The U.S. Energy Information Agency's weekly inventory release (week
ended 1st April 11) showed a continued build-up in crude stockpiles due
to rising domestic production, even as imports fell.
q Total U.S. crude inventories climbed by 1.95 Mn bbls (WoW) to 357.6 Mn
bbls in the week ended 1st April 11, as refiners stockpiled oil before the
peak gasoline demand period, known as summer driving season (April-
September).
q Supplies at Cushing slipped 16K (WoW) bbls to 41.9 Mn bbls. Stockpiles
in the previous week were at the highest level since 2004. We believe if
this trend persists then we see the spread between WTI and Brent to narrow.
q U.S. gasoline inventories fell by 357K bbls (WoW) to 216.7 Mn bbls. The
Gasoline inventories declined for the seventh-straight week as firms cut
down on inventories to facilitate the changeover from winter to summer-
grade gasoline specifications. The U.S. is the world’s largest oil-consuming
country and gasoline demand accounts for ~48% of total fuel use
(EIA).
q The supplies of distillate fuel (includes heating oil and diesel) rose 195K
bbls (WoW) to 153.5 Mn bbls mainly due to rise in production partly offset
by lower imports and improved demand.
q U.S refinery run-rates improved by 0.3 percentage points (WoW) to 84.4
percent of capacity.
Conclusion
q We note that despite the continued surplus in US crude oil inventory,
WTI crude oil price continue to rise higher and is currently trading at
~$113/bbls. This in our view is mainly due to the concerns that the unrest
in Libya will boil over to other oil rich nations in the Middle East
and lead to a supply shortfall.
q If supplies at Cushing slip further then we expect the spread between
WTI and Brent to narrow with the fall in Brent crude oil price and/or rise
of WTI oil price. If the price of Brent falls down then it will be beneficial
for India as Indian crude oil basket of crude consist of 32.4% of ICE Brent
crude.
q Also, the prices of gasoline can go up due to higher demand in the summer
driving season leading to better refining margins for refiners. Indian
refineries export gasoline to US, Europe, etc.
India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��
OIL INVENTORY INDICATORS
Key observations
q The U.S. Energy Information Agency's weekly inventory release (week
ended 1st April 11) showed a continued build-up in crude stockpiles due
to rising domestic production, even as imports fell.
q Total U.S. crude inventories climbed by 1.95 Mn bbls (WoW) to 357.6 Mn
bbls in the week ended 1st April 11, as refiners stockpiled oil before the
peak gasoline demand period, known as summer driving season (April-
September).
q Supplies at Cushing slipped 16K (WoW) bbls to 41.9 Mn bbls. Stockpiles
in the previous week were at the highest level since 2004. We believe if
this trend persists then we see the spread between WTI and Brent to narrow.
q U.S. gasoline inventories fell by 357K bbls (WoW) to 216.7 Mn bbls. The
Gasoline inventories declined for the seventh-straight week as firms cut
down on inventories to facilitate the changeover from winter to summer-
grade gasoline specifications. The U.S. is the world’s largest oil-consuming
country and gasoline demand accounts for ~48% of total fuel use
(EIA).
q The supplies of distillate fuel (includes heating oil and diesel) rose 195K
bbls (WoW) to 153.5 Mn bbls mainly due to rise in production partly offset
by lower imports and improved demand.
q U.S refinery run-rates improved by 0.3 percentage points (WoW) to 84.4
percent of capacity.
Conclusion
q We note that despite the continued surplus in US crude oil inventory,
WTI crude oil price continue to rise higher and is currently trading at
~$113/bbls. This in our view is mainly due to the concerns that the unrest
in Libya will boil over to other oil rich nations in the Middle East
and lead to a supply shortfall.
q If supplies at Cushing slip further then we expect the spread between
WTI and Brent to narrow with the fall in Brent crude oil price and/or rise
of WTI oil price. If the price of Brent falls down then it will be beneficial
for India as Indian crude oil basket of crude consist of 32.4% of ICE Brent
crude.
q Also, the prices of gasoline can go up due to higher demand in the summer
driving season leading to better refining margins for refiners. Indian
refineries export gasoline to US, Europe, etc.
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