uploads///Distillates

US Distillate Inventories Declined: Fourth Time in 10 Weeks

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Feb. 15 2018, Updated 11:22 a.m. ET

EIA’s US distillate inventories 

US distillate inventories decreased by 0.5 MMbbls (million barrels) or 0.3% to 141.4 MMbbls on February 2–9, 2018. The inventories also declined by 28.7 MMbbls or 16.9% from a year ago.

Analysts estimated that US distillate inventories would decline by 1.1 MMbbls on February 2–9, 2018. Diesel prices rose on February 14, 2018, despite the decline in distillate inventories.

US diesel futures rose 2.6% to $1.88 per gallon on February 14, 2018. Diesel and crude oil futures move together, as you can see in the above chart. US crude oil futures contracts rose 2.4% to $60.60 per barrel on February 14, 2018.

The PowerShares DB Oil Fund (DBO) and the ProShares Ultra Bloomberg Crude Oil (UCO) follow crude oil futures. DBO and UCO rose 1.7% and 5.3%, respectively, on February 14, 2018.

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US distillate production and demand 

US distillate production decreased by 318,000 bpd (barrels per day) or 6% to 4,811,000 bpd on February 2–9, 2018, according to the EIA. However, production increased by 280,000 bpd or 6.2% from a year ago.

US distillate demand increased 8% to 4,082,000 bpd on February 2–9, 2018. The demand also increased by 229,000 bpd or 6% from a year ago. The increase in distillate demand is bullish for diesel and oil prices.

Impact  

US distillate inventories were ~0.6% above their five-year average, which is bearish for diesel and oil prices. If US distillate inventories drop below the five-year average, it could be bullish for diesel and oil prices.

Read Hedge Funds Are Reducing Net Long Positions in Crude Oil and OPEC’s Compliance: Trouble for Natural Gas Bulls? for the latest updates on oil and gas.

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