Global equities declined over the last twenty four hours as the EMI Global Equity Index declined by 0.51 percent with the year to date loss widening to 4.3 percent. The Index is now lower for the week with five bourses in negative territory for the year. Brazil and Japan are still holding the bottom two spots in the Index with Canada still at the top of the leader board with crude oil prices still trading above the $100/bbl mark. Global equities have been a negative price driver for the oil complex as well as the broader commodity complex.
Wednesday's API report was neutral to mildly bearish as total crude oil stocks increased less than expected while refined product inventories declined less than expected. The lower than expected build in crude oil was mostly related to the interruption in ship movements through the Houston Ship Channel due to fog closing down the channel. The API reported a smaller draw in gasoline and in distillate fuel than what was expected. Total inventories of crude oil and refined products were about unchanged on the week.
The oil complex is mixed as of this writing and heading into the EIA oil inventory report to be released at 10:30 AM EST 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. Crude oil stocks increased by 0.8 million barrels. On the week gasoline stocks decreased by about 0.3 million barrels while distillate fuel stocks decreased by about 0.7 million barrels. Refinery utilization rates increased by 0.5 percent suggesting the spring maintenance season is not yet underway.
The API reported Cushing crude oil stocks decreased by 1.1 million barrels for the week. The API and EIA have been very much in sync on Cushing crude oil stocks and as such we should see a similar draw in Cushing in the EIA report. Directionally it is bearish for the Brent/WTI spread.
My predictions for this week’s inventory report are summarized in the following table. I am expecting a modest build in crude oil stocks as the restocking process continues for the sixth week in a row. I am also expecting a modest draw in gasoline inventories and in distillate fuel last week with refinery run rates starting to decline.
I am expecting crude oil stocks to increase by about 1.5 million barrels. If the actual numbers are in sync with my projections the year over year comparison for crude oil will now show a deficit of 12.6 million barrels while the overhang versus the five-year average for the same week will come in around 13.3 million barrels.