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US Distillate Inventories Rose for the Eighth Time in 10 Weeks

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Nov. 20 2020, Updated 2:59 p.m. ET

US distillate inventories 

US distillate inventories rose by 0.64 MMbbls (million barrels) to 139.8 MMbbls on January 12–19, 2018, according to the EIA. Inventories increased 0.5% week-over-week but decreased by 29.3 MMbbls or 17% YoY (year-over-year).

Wall Street analysts estimated that US distillate inventories could have declined by 1.5 MMbbls on January 12–19, 2018. US diesel futures rose 1% to $2.10 per gallon on January 24, 2018. US crude oil (USO) (SCO) and diesel futures moved together on January 24, 2018.

US crude oil (DWT) prices are at a three-year high. It benefits energy producers (RYE) (VDE) like Newfield Exploration (NFX), Whiting Petroleum (WLL), Parsley Energy (PE), and SN Energy (SN).

Diesel prices are near three-year highs, which favors US refiners (CRAK) like CVR Energy (CVI), Phillips 66 (PSX), and PBF Energy (PBF).

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US distillate production and demand  

US distillate production declined by 249,000 bpd (barrels per day) to 4,827,000 bpd on January 12–19, 2018, according to the EIA. Production decreased 5% week-over-week but increased by 252,000 bpd or 5.5% YoY.

US distillate demand decreased by 891,000 bpd to 3.9 MMbpd on January 12–19, 2018. Demand decreased 18.8% week-over-week but increased by 202,000 bpd or 5.5% YoY. The YoY increase in distillate demand is bullish for diesel and oil (SCO) prices.

Impact

US distillate inventories rose for the eighth time in the last ten weeks. Inventories increased ~12.1% during the same period, which is bearish for diesel and oil (UWT) prices.

US distillate inventories are 2.8% below their five-year average, which is bullish for diesel and oil (DBO) prices. Any rise in US distillate inventories above the five-year average could have a negative impact on diesel and oil (UCO) prices.

Read Crude Oil Prices Could Hit $80 per Barrel in 2018 and Can OPEC and Natural Gas Production Support Natural Gas Bears? for updates on oil and gas.

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