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US Distillate Inventories Are at 32-Month Low

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US distillate inventories  

The EIA reported that US distillate inventories fell by 3,359,000 barrels to 125.5 MMbbls (million barrels) or 2.6% between October 27, 2017, and November 3, 2017. Inventories fell 23.0 MMbbls, or 15.5%, from the same period in 2016.

Wall Street analysts expected that US distillate inventories would fall by 1,372,000 barrels between October 27, 2017, and November 3, 2017. A larger-than-expected decline in distillate inventories supported US diesel and crude oil (USO) (SCO) (DBO) futures on November 8, 2017. US diesel futures rose 0.02% to $1.92 per gallon on the same day.

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US crude oil (USL) (DWT) prices are near a 30-month high. High oil prices positively impact oil producers (VDE) (FXN) like Noble Energy (NBL), Whiting Petroleum (WLL), and Sanchez Energy (SN). Similarly, higher diesel prices benefit refiners (CRAK) like Alon USA Energy (ALJ), Tesoro (TSO), and Northern Tier Energy (NTI).

US distillate production and demand  

US distillate production rose by 163,000 bpd (barrels per day), or 3.2%, to 5,199,000 bpd between October 27, 2017, and November 3, 2017. Production was up by 415,000 bpd, or 8.6%, from the same period in 2016. US distillate demand rose by 952,000 bpd, or 27%, to 4,486,000 bpd between October 27, 2017, and November 3, 2017. Demand rose by 443,000 bpd, or 11%, from the same period in 2016.

Impact  

US distillate inventories are at a 32-month low. They are down 35%, or by 45.3 MMbbls, from their peak. Any further fall in distillate inventories could have a positive impact on diesel and crude oil (DBO) (UWT) prices.

Read Are Russia and the US New Problems for the Crude Oil Market? and Global Crude Oil Glut: Is It Shrinking? for the latest updates on crude oil and natural gas.

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