•Total Stocks Rise — Total combined crude & product stocks rose 0.8mmbbls vs. a
normal season draw of 0.3. Utilization fell below 78%. Crude stocks built by
2.3mmbbls vs. an expected build of 0.4mmbbls on increased imports (up 7%).
Total demand for crude and products fell to 18.7mmbls/d from 18.9mmbls/d last
week on lower distillate and residual fuel demand.
•Gasoline Stocks Fall — Gasoline stocks drew by 1.3mmbbls vs. an expected build
of 1.4. Draws were most significant in PADD I. Imports rose 13% and production
fell by 1%. Demand was essentially flat for the third straight week (remaining at
8.6mmbls/day) continuing the seasonal trend for this time of year. Demand cover
remained at 26 days, 5% above the 5-year average. If demand does not pick up in
the next few weeks, we would start to become concerned with forward margins.
•Distillate Stocks Fall — Distillate stocks fell 0.9mmbbls vs. an expected draw of
1.2. Imports fell 33% but remain slightly elevated. Demand fell 2% to below
3.7mmbls/day. Demand appears to have stalled out for now and has been range
bound since the beginning of the year. Production decreased by 1% for the week.
Distillate stocks are 19% above average. Based on historic trends, inventories
tend to draw down the most between now and April.
•Cracks Rise — The gasoline crack rose this week to $8.50 vs. $8.06/barrel last
week. The heating oil crack rose to $8.23 vs. $7.49 last week. Heavy-light spreads
retreated to $7.27 per barrel, down from close to $8 last week. One-month forward
basis for California appears constructive ($0.09 to $0.14 p/gal).
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