US distillate inventories
The EIA (U.S. Energy Information Administration) released its weekly crude oil report on June 1, 2017. It reported that US distillate inventories rose by 0.4 MMbbls (million barrels) to 146.7 MMbbls on May 19–26, 2017. Distillate inventories rose 0.3% week-over-week but fell 1.9% YoY (year-over-year). Distillate inventories rose for the first time in the last five weeks.
July diesel futures contracts fell 1.3% to $1.49 per gallon on June 1, 2017. Prices fell due to the surprise rise in distillate inventories. Diesel and crude oil (FXN) (BNO) (SCO) futures usually move together. However, crude oil futures rose on June 1, 2017.
The rollercoaster ride in crude oil and diesel fuel prices impacts US refiners and crude oil producers’ earnings like Western Refining (WNR), Valero Energy (VLO), Swift Energy (SFY), and Stone Energy (SGY).
Distillate production and demand
US distillate production rose 0.5% to 5,226,000 bpd (barrels per day) on May 19–26, 2017. It rose 10% YoY.
US distillate imports rose 4% to 105,000 bpd on May 19–26, 2017—52% higher than the same period in 2016.
Distillate demand fell 7.6% to 4,025,000 bpd on May 19–26, 2017. It rose 5.2% YoY. All of these supply and demand factors drive distillate inventories.
US distillate inventories are ~14% below their peak. Inventories have fallen by ~23.3 MMbbls in the last 15 weeks. The expectation of falling distillate inventories is bullish for diesel and crude oil prices.
Read Crude Oil: Is It the Beginning of a Bear Market? and OPEC Extended the Output Cut Deal: Stable Crude Oil Prices? for more on crude oil prices.