US distillate inventories
The EIA (U.S. Energy Information Administration) reported that US distillate inventories fell by 2.7 MMbbls (million barrels) to 161.5 MMbbls between February 24, 2017, and March 3, 2017. US distillate inventories hit 170.7 MMbbls in the week ending February 3, 2017—the highest level since 2010. Surveys estimated that US distillate inventories would have fallen by 0.9 MMbbls between February 24, 2017, and March 3, 2017. US distillate inventories fell for the fourth straight week. US distillate inventories fell 5.4% from their all-time high.
April diesel futures fell 3.7% to $1.55 per gallon on March 8, 2017. Bearish momentum in crude oil (ERY) (FXN) (ERX) prices pressured diesel futures on March 8, 2017. Moves in crude oil and diesel fuel prices impact US refiners and crude oil producers’ earnings like Tesoro (TSO), Valero Energy (VLO), Sanchez Energy (SN), and Goodrich Petroleum (GDP). For more on crude oil prices, read Part 1 of this series.
Distillate consists of diesel fuel and heating oil. The EIA reported that US residential heating oil prices fell 0.4% to $2.63 per gallon for the week ending March 3, 2017—compared to February 27, 2017.
Distillate production and demand
US distillate production rose by 18,000 bpd (barrels per day) to 4,773,000 bpd between February 24, 2017, and March 3, 2017. US distillate imports rose by 56,000 bpd to 266,000 bpd for the same period. Weekly distillate demand rose by 278,000 bpd to 4,091,000 bpd during the same period.
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.
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