Global equities are continuing to show a mixed performance picture for 2013 as shown in the EMI Global Equity Index table below. The EMI Index increased marginally over the last twenty four hours narrowing the year to date loss to 0.4%. On the week the Index has improved by 0.5% with gains in most of the bourses in the Index. Japan remains the high flyer of the year (so far) with a gain of 20.2% for 2013 while the U.S. Dow is now showing a gain of 11.1% for the year as the U.S. economy is showing signs that growth is slowly picking up unlike Europe. The strength of the U.S. dollar over the last two months is a combination of a flight to quality caused by the evolving debt problems and slow growth of the European economy as well as a movement of cash to the U.S. into U.S.-based risk asset markets.
Tuesday's API report was bearish for crude oil and mildly supportive for refined products. There was as surprisingly larger than expected build in crude oil stocks but offset by a larger than expected draw in gasoline and distillate fuel inventories. Total crude oil stocks increased by 3.7 million barrels versus an expectation for a smaller build. Gasoline showed a draw in inventory as did distillate fuel stocks. The API reported a 3.7 million barrel draw in crude oil stocks versus an industry expectation for a modest build of around 1 million barrels as crude oil imports increased strongly while refinery run rates also increased strongly by 1.8%. The API reported a modest draw in distillate and in gasoline stocks.
The API report was mixed. WTI and RBOB are lower while everything else in the oil complex is currently in positive territory for the session heading into the EIA oil inventory report tomorrow at 10:30 AM today. The market is usually cautious on trading on the API report and prefers to wait for the more widely watched EIA report due out this morning. The API reported PADD 2 stocks built by around 471,000 barrels while Cushing stock increased by 0.4 million barrels. On the week gasoline stocks decreased by about 2 million barrels while distillate fuel stocks decreased by about 1.9 million barrels.
My projections for this week’s inventory report are summarized in the following table. I am expecting a modest build in crude oil inventories, a modest decline in distillate fuel... as the weather was winter like over the east coast... and a draw in gasoline stocks during the report period as refinery runs remain at below normal levels during the maintenance season.
I am expecting crude oil stocks to increase by about 1 million barrels. If the actual numbers are in sync with my projections the year over year comparison for crude oil will now show a surplus of 27.3 million barrels while the overhang versus the five year average for the same week will come in around 40.9 million barrels.