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US Distillate Inventories Are near a 3-Year Low

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US distillate inventories 

The EIA estimates that US distillate inventories fell by 799,000 barrels to 124.7 MMbbls (million barrels) on November 3–10, 2017. Inventories fell 0.6% week-over-week and by 23.8 MMbbls or 16.04% YoY (year-over-year).

The market expected that US distillate inventories would have fallen by 500,000 barrels on November 3–10, 2017. A better-than-expected draw in distillate inventories supported US diesel futures on November 15, 2017. Diesel futures rose 1.1% to $1.90 per gallon on the same day, while US crude oil (USL) (UCO) futures fell.

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US crude oil (UWT) (USO) prices are at a ten-day low. Changes in oil prices impact energy producers (IEO) (FENY) like Northern Oil & Gas (NOG), Newfield Exploration (NFX), and Energen (EGN). Changes in diesel prices impact refiners (CRAK) like CVR Energy (CVI), Western Refining (WNR), and Alon USA Energy (ALJ).

US distillate production and demand  

US distillate production rose by 32,000 bpd (barrels per day) to 5,231,000 bpd on November 3–10, 2017. Production rose 0.6% week-over-week and by 247,000 bpd or 5% YoY.

US distillate demand fell by 457,000 bpd to 4,029,000 bpd on November 3–10, 2017. Demand fell 10% week-over-week but rose by 85,000 bpd or 2.1% YoY.

Impact 

US distillate inventories are near a three-year low. They have fallen ~35.5% or by ~46 MMbbls from their all-time high. Any fall in distillate inventories would be bullish for diesel and crude oil (DWT) (SCO) prices.

Read Oil Exports and the IEA’s Report Could Drag Crude Oil Futures and Are Hedge Funds Turning Bullish or Bearish on Natural Gas? for the latest updates on oil and gas.

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