US distillate inventories
US distillate inventories rose by 1.1 MMbbls (million barrels) to 129.9 MMbbls from December 15 to 22, per the EIA. Inventories rose 0.8% week-over-week but declined by 21.6 MMbbls or 14.3% year-over-year.
Wall Street analysts anticipated that US distillate inventories could have declined by 0.5 MMbbls from December 15 to 22. US crude oil (UCO)(DBO) and diesel futures rose on December 27. US diesel futures rose 0.6% to $2.05 per gallon on the same day.
Higher diesel prices favor US refiners (CRAK) like Holly Frontier (HFC) and Valero (VLO). Likewise, higher oil (USL) prices favor energy producers (XOP)(VDE) like Bonanza Creek Energy (BCEI), W&T Offshore (WTI), and Bill Barrett (BBG).
US distillate production and demand
US distillate production increased by 27,000 bpd (barrels per day) to 5.4 MMbpd (million barrels per day) from December 15 to 22, per the EIA. Production increased 5.2% week-over-week and 519,000 bpd or 10.5% year-over-year.
US distillate demand increased by 400,000 bpd to 4.3 MMbpd from December 15 to 22. Demand increased 10% week-over-week and 359,000 bpd or 9% year-over-year. Any increase in distillate demand is bullish for diesel and oil (DBO) prices.
US distillate inventories rose for the fifth time in the last six weeks. Inventories rose ~4.1% in the last six weeks, which is bearish for diesel and oil (DWT) prices.
However, US distillate inventories are 2.5% below their five-year average, which is bullish for diesel and oil (SCO) prices. Any fall in distillate inventories is bullish for diesel and oil (USL) prices.
See How Iraq, Libya, and US Crude Oil Inventories Could Affect Prices for updates on crude oil.