US Distillate Inventories Fell for the Fifth Straight Week
US distillate inventories
The EIA (U.S. Energy Information Administration) reported that US distillate inventories fell by 4.2 MMbbls (million barrels) to 157.3 MMbbls from March 3–10, 2017. Surveys estimated that US distillate inventories would have fallen by 1.6 MMbbls from March 3–10, 2017.
US distillate inventories fell for the fifth straight week. April diesel futures rose 1.3% to $1.51 per gallon on March 15, 2017. A larger-than-expected fall in distillate inventories supported diesel futures. Crude oil (XLE) (FXN) (USO) and diesel futures moved together on March 15, 2017. Volatility in crude oil and diesel fuel prices impact US refiners and crude oil producers’ earnings like Valero Energy (VLO), Matador Resources (MTDR), SM Energy (SM), and Tesoro (TSO). For more on crude oil prices, read Part 1 of this series.
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Distillate consists of diesel fuel and heating oil. The EIA reported that US residential heating oil prices fell 0.4% to $2.61 per gallon for the week ending March 13, 2017—compared to March 6, 2017.
Distillate production and demand
US distillate production fell by 83,000 bpd (barrels per day) to 4,690,000 bpd from March 3–10, 2017. US distillate imports fell by 187,000 bpd to 79,000 bpd for the same period. Weekly distillate demand rose by 318,000 bpd to 4,409,000 bpd during the same period.
US distillate inventories hit 170.7 MMbbls in the week ending February 3, 2017—the highest level since 2010. US distillate inventories are in the upper range of their five-year range. High distillate inventories could pressure diesel fuel, heating oil, and crude oil prices.
Read What Can Investors Expect in the Crude Oil Market in 2017 and Are Crude Oil Prices on the Verge of Collateral Damage? for more on crude oil prices.
For more industry analysis, visit Market Realist’s Energy and Power page.