EIA projects 2012 oil demand around 2011 levels

The API report showed a surprisingly large draw in a crude oil along with a much larger than expected build in gasoline stocks. The API reported a large draw (of about 4.5 million barrels) in crude oil stocks versus an expectation for a modest build in crude oil inventories as crude oil imports decreased and refinery run rates also increased by 2.0%. The API reported a large build in gasoline stocks and a build in distillate stocks versus an expectation for a modest draw in inventories.

The report is mixed-to-bullish for crude oil, and bearish for refined products. That said it is difficult to differentiate whether the gains overnight were from the inventory report (I doubt it) or from the firming euro and positives out of Europe (most likely). The market remains hostage to the evolving situation in Europe that has been unfolding once again along with the geopolitics of the mid-east and Nigeria this week as discussed above with inventory data a secondary driver. The API reported a draw of about 4.5 million barrels of crude oil with a 0.4 million barrel build in Cushing and a decline of about 0.2 million barrels in PADD 2 which is neutral for the Brent/WTI spread. On the week gasoline stocks surged by about 4.4 million barrels while distillate fuel stocks increased by about 0.4 million barrels. The EIA data will hit the media airwaves at 10:30 AM EST today. Whether or not the market will react to anything that comes out of the EIA this morning will be dependent on what revolves around Europe today.

My projections for this week’s inventory reports are summarized in the following table. I am expecting a mixed inventory report this week with a modest build in crude oil and gasoline stocks, a seasonal decline in distillate stocks along with a small increase in refinery utilization rates. I am expecting a modest build in gasoline inventories and a seasonal draw in distillate fuel stocks even as winter like weather still did not arrive during the report period in many parts of the US. I am expecting crude oil stocks to increase by about 2.2 million barrels. If the actual numbers are in sync with my projections the year over year deficit of crude oil will come in around 3.9 million barrels while the overhang versus the five year average for the same week will widen around 10.8 million barrels.

With refinery runs expected to increase by 0.2% I am expecting a build in gasoline stocks. Gasoline stocks are expected to increase by about 0.5 million barrels which would result in the gasoline year over year deficit coming in around 10.2 million barrels while the surplus versus the five year average for the same week will come in around 1.9 million barrels.

Distillate fuel is projected to decrease by 0.9 million barrels on a combination of an increase in export. If the actual EIA data is in sync with my distillate fuel projection inventories versus last year the deficit will likely now be about 19.9 million barrels below last year while the deficit versus the five year average will come in around 0.6 million barrels.

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