Here’s one simple way to see U.S. oil production keep increasing

With refinery runs expected to increase by 0.1 percent I am expecting a modest build in gasoline stocks. Gasoline stocks are expected to increase by 1.5 million barrels which would result in the gasoline year over year surplus coming in around 1.3 million barrels while the surplus versus the five year average for the same week will come in around 7 million barrels.

Distillate fuel is projected to decrease by 0.5 million barrels as exports of distillate fuel out of the US Gulf remains robust and heating demand last week was above normal along the east coast. If the actual EIA data is in sync with my distillate fuel projection inventories versus last year will likely now be about 9.4 million barrels below last year while the deficit versus the five year average will come in around 25.7 million barrels.

The following table compares my projections for this week's report with the change in inventories for the same period last year. As you can see from the table last year's inventories are not in directional sync with the projections. Thus, if the actual data is in line with the projections there will be modest changes in the year over year inventory comparisons for everything in the complex.

I am maintaining my oil view and bias at cautiously bullish for the entire oil complex. The oil complex is continuing to go through a major transition with inventories continuing to decline on the US side of the equation and with a slight improvement in the ongoing problems in several international supply locations.

I am maintaining my Nat Gas view and bias at cautiously bullish as the market sentiment seems to be changing once again as another round of cold temperatures head back into the eastern half of the US over the next several days.

Markets are mostly higher heading into the US trading session as shown in the following table.

Best Regards,

Dominick A. Chirichella

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