The EIA’s Weekly Petroleum Status Report was released yesterday. There was a build of 4.7 million bbls on crude inventories. The EIA stated that for refined products, gasoline drew by 271,000 bbls and distillate built by 115,000 bbls. The national change in crude stocks yesterday was the first reported build in over a month, even with the draw of 400,000 bbls in Cushing, OK. As a comparison to last year crude stocks are up 27%, distillates are up 22% and gasoline is up 2%. As it stands today, supply appears to have enough length to meet demand.
Refinery utilization has also been declining over the past few weeks, coming down from its current high water mark of 96.1% in early August. Refinery utilization slipped by 1.7% over this past week, leveling off at 92.8% nationally. Refinery turnaround season is fast approaching, therefore the continued decline in utilization is expected.
It will be important to follow the Iran nuclear deal closely as the deadline approaches. If the deal goes through it will lift the current Iranian sanctions restricting oil output. However, in anticipation of approval Iran has released a statement saying that they are preparing to double their current fuel output. If they achieve the increased output it could increase global supply by an estimated 1 million b/d in an already flush market. In response, certain OPEC members have released statements calling for a meeting to address current market conditions and have expressed a need for both Russia and the United States to comply with any production cuts