Oil defensive while waiting for inventory confirmation

I am expecting a small build in crude oil stocks in Cushing, Ok and in PADD 2 even as the Seaway pipeline has been has been running at constrained levels for most of the report period. This will be mildly bullish for the Brent/WTI spread and could serve as a catalyst for a short covering rally in the spread as it is currently oversold. However, with the North Sea operating normally only a small build in

Cushing stocks may not be enough for anything other than a shallow and short lived short covering rally.

With refinery runs expected to increase by 0.2 percent I am expecting a draw in gasoline stocks. Gasoline stocks are expected to decrease by 1.0 million barrels which would result in the gasoline year over year deficit coming in around 1.6 million barrels while the surplus versus the five year average for the same week will narrow to around 0.4 million barrels.

Distillate fuel is projected to decrease by 1.2 million barrels. If the actual EIA data is in sync with my distillate fuel projection inventories versus last year will likely now be about 17.3 million barrels below last year while the deficit versus the five year average will come in around 18.9 million barrels.

The following table compares my projections for this week's report (for the categories I am making projections with the change in inventories for the same period last year. As you can see from the table last year's inventories are in directional sync with minimal differences compared to last year’s changes. As such if the actual data is in line with the projections there will be only modest changes in the year over year inventory comparisons for crude oil.

I am maintaining my view of the entire complex at neutral as the oil complex still appears to be in the process of forming a short term technical bottom. However,

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