How US Distillate Inventories Impact Diesel and Crude Oil Prices

US distillate inventories  

The US Energy Information Administration (or EIA) estimates that US distillate inventories fell by 1.4 MMbbls (million barrels) to 133.9 MMbbls between September 29 and October 6. Similarly, inventories are down by 23 MMbbls or 14.6% year-over-year.

The market expected that US distillate inventories would fall by 2.2 MMbbls between September 29 and October 6. US diesel futures fell on October 12 despite the fall in distillate inventories.

Diesel futures fell 1.2% to $1.76 per gallon on October 12. Likewise, US crude oil (UWT)(DWT) prices fell.

How US Distillate Inventories Impact Diesel and Crude Oil Prices

Volatility in oil prices impacts oil producers (OIH)(IEO) like Whiting Petroleum (WLL), PDC Energy (PDCE), and Sanchez Energy (SN).

Moves in diesel prices impact US refiners (CRAK) like Tesoro (TSO), CVR Energy (CVI), and Northern Tier Energy (NTI).

US distillate production, imports, and demand  

US distillate production rose by 35,000 bpd (barrels per day) to 4,964,000 bpd between September 29 and October 6. However, production is down 468,000 bpd or 10.4% year-over-year.

US distillate imports rose by 13,000 bpd to 85,000 bpd. However, imports are down 10,000 bpd year-over-year.

US distillate demand fell by 359,000 bpd or 9% to 3,648,000 bpd. Demand fell 14.5% or 618,000 bpd year-over-year.

Impact  

US distillate inventories are down by 13.7 MMbbls or 9.3% in the last ten weeks. They fell for the sixth straight week. Any fall in distillate inventories could support diesel futures, which could benefit crude oil (USO)(UCO) prices.

To learn more, see What Dennis Gartman Thinks about Crude Oil Prices and What to Expect from Crude Oil Prices in 4Q17.