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USA
After building in September, US total oil commercial inventories saw a draw in October, falling 25 mb from the previous month to 1,063.7 mb. This represented still a cushion of 5.8% and 3.4% against the year-ago level and the five-year average. The draw was the result of a decline in product inventories which largely outpaced the surplus in crude oil.
Contrary to the downward trend in September, crude oil inventories rose by 5.8 mb in October, which left a level of 334.6 mb at 4% and 11% above the year-ago and the five-yearaverage. This trend reflected a slight increase in production together with a cut in refinery runs which declined from 15.7 mb/d to 15.1 mb/d in October compared to the previous monthas many refineries went into turnaround. The refinery utilization rate declined from 92% in September to 87.6% in October. In terms of forward cover, crude oil stocks were 3% and 11% above the same month last year and the five-year average.
Gasoline inventories witnessed a drop of 11 mb in October from the previous month, which left the level at 204 mb or 8% and 2.4% higher than the same month last year and the five-yearaverage, respectively. The fall in gasoline stocks was related to a 1.5% expansion in domestic demand compared to September which may due to the lower retail and pump prices seenduring the last three months. Lower production and imports in October also contributed to this performance. In terms of forward cover, at 21.7 days gasoline inventories were 8.9% over the year-ago level and 2% higher than the five-year average. Moving to middle distillates, stocks declined by 11.7 mb to 139.3 in October compared to the previous month which left theforward cover at 31.2 days or 1% below the five-year average. Diesel inventories ended the month 10.1 mb lower than in September following a hefty 52% decline in imports in Octoberfrom the previous month and a 6.7% reduction in production (EIA, four-week average). Despite that, diesel inventories remained comfortable 15% and 13% higher than the year-agolevel and the five-year average. It must be noted that the major drop in diesel inventories came from regular sulphur diesel stocks which experienced a draw of around 9 mb in October on a monthly basis. With the first cold spells of winter, heating oil inventories edged down by 2.8 mb to 60.2 mb in October compared to September, or 15% and 10% above the year-ago level and the five-year average. Greater demand and declining production outpaced the expansion in imports. In terms of forward cover, there was a decline from 72.5 days to59 days on a monthly basis, but this was still above the five-year average.
In the week ending 3 November, crude oil inventories edged up by 0.44 mb to 334.7 mb following lower refinery runs as imports declined and production recovered slightly. The forward coverage was at comfortable levels compared to the year-ago level and the five-year average. US refinery utilization rate fell to 88.1% during the referred week which seems tosupport reports of unplanned outages of nearly 190,000/ b/d. In the case of gasoline, stocks declined by 0.6 mb to 205.1 week-on-week, which represented a cushion of 1.4% and 3%against the year-ago level and the five-year average. Coming to middle distillate stocks, the draw of 2.7 mb week-on-week was more than forecast. Diesel inventories declined by 2.9 mbowing to lower production and a slight drop in imports, but these were well above the year-ago level and the five-year average. Although there was a build of 0.25 mb in heating oil stocks which left them at a comfortable level of 60.2 mb compared to one year ago and the five-year average, forward cover indicated a fall of 2 days compared to the previous week. The situation of the oil market and inventories will depend heavily on the weather conditions.
Western Europe
Total commercial oil stocks in Eur-16 (EU-15 plus Norway) ended the month at 1,138.9 mb, a drop of 7.2 mb compared to September or 1.4% lower than the same month last year but 6.8%above the five-year average. The stock-draw took place mainly on the back of middle distillates followed by crude oil and gasoline. Crude oil stocks dropped by 1.4 mb to 486.9 mb in October despite lower refinery runs, which still left inventories at comfortable levels, slightly above a year earlier and 5.4% above the five-year average.
Total product stocks were down by 6.3 mb to 623.3 mb in October relative to September. This was 4.4% below the year-ago level but 3.7% higher than the five-year average. Gasoline,inventories showed a fall of 1.3 mb to 129.7 mb in October, being 0.5% lower than a year ago but 5% above the five-year average. The draw on gasoline stocks was due to exports to theUSA, where demand started to show signals of growth due to lower prices. Middle distillate stocks experienced a 7.1 mb draw to stand at 379.9 mb, or 3.7% below the year-ago level but8% higher than the five-year average. The downward trend was related to the boost in heating oil demand prompted by cold weather and refinery turnarounds. Refinery crude runs declinedcutting utilization capacity rate to 91% due to the autumn maintenance season, mainly in France and Germany. Residual fuel oil stocks edged up 2.1 mb to 113.8 mb in October on amonthly basis as a result of refinery maintenance which widened the fuel oil yields and led to a closure of the arbitrage to Asia-Pacific for most of the month. Inventories are 4% below the year-ago level but 1% above the five-year average.
Japan
Japanese total commercial inventories rose by 7.4 mb to stand at 194.3 mb in September compared to the previous month as a result of an expansion in total products and to a lesserextent in crude oil. This left total commercial inventories at almost 1% above the year-ago level and 2% higher than the five-year average. The falling trend witnessed by crude oil stocks in August turned into a surplus during September, expanding by 1.7 mb compared to the previous month, reaching a level of110.2 mb. Nevertheless, this was around 4% below the year-ago level and the five-year average. The build was associated with an 8.3% decline in refinery runs in September relativeto the previous month, despite a 2.3% decline in imports.
The 5.8 mb build in total product inventories in September was moderate compared to August. This left an inventory level of 84.1 mb or 7.4% and 9.9% above the year-ago level and thefive-year average respectively. The rise in stocks was the result of lower domestic demand as production and imports declined. The 5.8% increase in total product inventories was driven by kerosene, Fuel Oil A, and gasoline. In the case of gasoline, inventories went up by 0.9 mb to reach 13.6 mb in September on a monthly basis, which meant a cushion of 8% against the year-ago level and 4% over the five-year average. Gasoline demand dropped by 14% in September relative to August and was 6% lower than in the same month last year.Middle distillate stocks ended at 48.9 mb in September, a rise of 4.5 mb compared to the previous month and an increase of 8.1% and 10.8% relative to a year earlier and the five-yearaverage. It should be noted that according to recent data from the Petroleum Association of Japan (PAJ), kerosene stocks dropped by 0.9% to 33.96 mb in the week to 4 November compared to the previous week due to temporary stronger demand following a three-day weekend.
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