uploads///Distillates

US Distillate Inventories Fell for the Third Time in 5 Weeks

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Dec. 4 2020, Updated 10:52 a.m. ET

EIA’s US distillate inventories  

US distillate inventories decreased by 2.4 MMbbls (million barrels) to 138.9 MMbbls on February 9–16, 2018, according to the EIA. The inventories also declined by 26.2 MMbbls or 16% YoY (year-over-year).

Wall Street analysts estimated that US distillate inventories would have declined by 1.6 MMbbls on February 9–16, 2018. The larger-than-expected decline in distillate inventories supported diesel prices on February 22, 2018.

US diesel futures rose 1.1% to $1.95 per gallon on February 22, 2018. Diesel and crude oil futures move together. US crude oil futures contracts rose 1.8% to $62.77 per barrel on February 22, 2018.

The PowerShares DB Oil Fund (DBO) and the ProShares Ultra Bloomberg Crude Oil (UCO) track crude oil futures. DBO and UCO rose 1.3% and 4.9%, respectively, on February 22, 2018.

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US distillate production and demand  

US distillate production decreased by 322,000 bpd (barrels per day) to 4,489,000 bpd on February 9–16, 2018, according to the EIA. Production increased by 22,000 bpd or 0.5% YoY.

US distillate demand increased by 142,000 bpd to 4,224,000 bpd on February 9–16, 2018. However, demand decreased by 68,000 bpd or 1.5% YoY. The YoY decrease in distillate demand is bearish for diesel and oil prices.

Impact 

US distillate inventories are ~0.7% above their five-year average, which is bearish for diesel and oil prices. However, US distillate inventories fell for the third time in five weeks. If US distillate inventories decline below the five-year average, it could be bullish for diesel and oil prices.

Read Are Crude Oil Imports from China and India Benefiting Oil Prices? and Hedge Funds’ Net Long Positions in US Natural Gas near 2018 High for the latest updates on oil and gas.

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