US Distillate Inventories Fell for the Third Time in 10 Weeks

US distillate inventories fell by 3.8 MMbbls (million barrels) or 2.7% to 139.2 MMbbls on January 5–12, 2018. The inventories also fell by 29.9 MMbbls or 18% from a year ago.

Analysts expected that US distillate inventories could have risen by 0.1 MMbbls on January 5–12, 2018. US diesel futures fell 0.4% to $2.06 per gallon on January 18, 2018. US crude oil (USL) (UWT) and diesel futures moved together on the same day.

WTI crude oil (DBO) prices are near the highest level since December 2014. It benefits energy producers (RYE) (VDE) like Goodrich Petroleum (GDP), PDC Energy (PDCE), and Carrizo Oil & Gas (CRZO).

Diesel prices are near three-year highs. Moves in diesel prices impact US refiners (CRAK) like PBF Energy (PBF), Valero (VLO), and CVR Energy (CVI).

US distillate production fell by 215,000 bpd (barrels per day) or 4.1% to 5.1 MMbpd (million barrels per day) on January 5–12, 2018, according to the EIA. However, production increased by 363,000 bpd or 7.7% YoY (year-over-year).

US distillate demand increased by 1,083,000 bpd or 30% to 4.7 MMbpd on January 5–12, 2018. The demand also increased by 643,000 bpd or 15.7% YoY. Increased demand is bullish for diesel and oil (DWT) prices.

US distillate inventories fell for the third time in the last ten weeks. However, inventories increased ~11% during the same period, which is bearish for diesel and oil (USO) prices.

US distillate inventories are 4.5% below their five-year average, which is bullish for diesel and oil (SCO) prices. Any rise in US distillate inventories above the five-year average could be bearish for diesel and oil (UCO) prices.

Read Crude Oil: Is the Price Rally Unstoppable in 2018? and Bears Might Control the US Natural Gas Market in 2018 for updates on oil and gas.