OECD commercial stocks fell in February, driven by a decline in products as
crude rose. At 2,554 mb, stocks stood at 131 mb below the five-year average,
divided between crude (35 mb) and products (96 mb). In terms of days of forward
cover, OECD commercial stocks rose by 0.2 days in February to stand at
56.5 days. This is around two days lower than the five-year average. Preliminary
data for March shows that US commercial oil stocks rose by 2.1 mb, with crude
rising by 16.3 mb, while products dropped by 14.2 mb. At 1,037 mb,
US commercial inventories stood at 36 mb below the latest five-year average.
Chinese total oil commercial inventories rose strongly by nearly 33.0 mb in
February, driven by a build of crude and products, which increased by 10.2 mb
and 22.5 mb, respectively.
OECD
Preliminary data for February shows that total OECD commercial oil stocks declined
further by 16.3 mb for the fifth consecutive month to stand at 2,554 mb. At this level,
inventories were around 111 mb below the same period the previous year and showed
a deficit of 131 mb compared with the five-year average.
Within the components, better-than-expected demand in OECD countries and higher
US product exports, along with a lower refinery utilization rate, led to a drop in product
stocks by around 18.4 mb, while crude oil commercial stocks rose slightly by 2.1 mb,
driven by lower crude demand during the period of refinery maintenance. At 1,233 mb,
OECD crude commercial inventories stood 34 mb below the seasonal norm and 40 mb
less than the same period a year ago. Product stocks stood at 1,322 mb, indicating a
deficit of 96 mb below the five-year average and representing a drop of around 70 mb
over a year earlier.
In terms of days of forward cover, OECD commercial stocks rose in February by
0.2 days to stand at 56.5 days. This is around two days lower than both the latest fiveyear average and the same month a year earlier. OECD Americas were 2.2 days below
the historical average at 53.6 days in February and OECD Europe stood at 1.7 days
below the seasonal average to finish the month at 67.1 days. Meanwhile, OECD
Asia-Pacific indicated a deficit of 2.4 days, averaging 47.2 days.
In February, commercial stocks in OECD Americas fell by 10.0 mb for the fifth
consecutive month to stand at 1,278 mb. With this drop, inventories were 40 mb below
the seasonal norm, and stood 67 mb below a year ago at the same time. Within the
components, the total stock draw is attributed to products, as crude remained almost
unchanged from the previous month.
At the end of February, crude commercial oil stocks in OECD Americas remained
almost unchanged versus the previous month, following a build of 3.7 mb in January.
At 649 mb, OECD Americas’ crude oil commercial stocks finished the month at 7.5 mb
above the latest five-year average, but 25 mb less than a year ago at the same time.
OECD Americas’ product stocks fell in February, declining by 10.1 mb following a
strong stock draw of 30.3 mb in January. At 629 mb, this represents a deficit of 48 mb
below the seasonal norm, and 42 mb below the same time a year ago. The bulk of the
drop came from gasoline, which fell by 7 mb, while distillate stocks experienced a drop
of only 2.0 mb. Cold winter weather and higher exports in the US left the distillate
market tight, as highlighted by the deficit of 33.0 mb below the latest five-year average,
while gasoline stocks remained in line with the seasonal norm.
In February, OECD Europe’s commercial stocks rose by 1.5 mb for the second
consecutive month to stand at 898 mb. At this level, OECD Europe’s commercial
stocks stood at 72 mb below the seasonal norm and 28 mb less than a year ago at the
same time. Within the components, crude stocks went up by 2.4 mb, while product
stocks abated the build, declining by 0.9 mb.
OECD Europe’s crude oil stocks in February stood at 369 mb, indicating a deficit of
26.1 mb below the seasonal norm; they stood 7.5 mb below the same time a year ago.
The build in crude oil inventories came mainly from higher supply, especially from the
North Sea.
In contrast, OECD Europe’s commercial product stocks fell slightly by 0.9 mb in
February, reversing the build of last two months. At 529 mb, OECD Europe’s
commercial product inventories showed a deficit of 46 mb below the seasonal norm
and stood 20 mb lower than a year ago at the same time. Higher refinery output has
limited a further decline in OECD Europe’s commercial product stocks.
Commercial inventories in OECD Asia-Pacific fell by 7.8 mb in February, reversing the
previous month’s build to stand at 378 mb. At this level, they were 18 mb below the
same period a year ago and 16 mb lower than the latest five-year average. Within the
components, both crude and product inventories fell by 0.4 mb and 7.4 mb,
respectively.
Crude inventories ended the month of February at 215 mb and stood at
16 mb below a year ago and 7 mb lower than the seasonal norm. OECD Asia-
Pacific’s total product inventories indicated a deficit of 8.9 mb compared with a year
ago and showed a deficit of 2.7 mb over the seasonal norm.
EU plus Norway
Preliminary data for February shows that European stocks rose by 1.5 mb, for the
second consecutive month to stand at 1,076.0 mb. Despite this build, European stocks
stood at 9.8 mb or 0.9% lower than the same time a year ago, and are 44.5 mb or 4.0%
below the latest five-year average. The total stock build came from crude as it
increased by 2.4 mb, while products abated the build, declining by 0.9 mb.
European crude inventories rose in February, reversing the fall of last two months to
stand at 463.8 mb. Crude inventories were 8.6 mb or 1.9% above the same period last
year, but are still 3.5 mb or 0.7% below the latest five-year average. The build in crude
oil inventories came mainly from higher supply, especially from the North Sea.
An increase in refinery crude runs limited a further build in crude stocks. Indeed, crude
runs were 270 tb/d higher in February compared with January, averaging around
10.0 mb/d.
In contrast, OECD Europe’s product stocks fell by 0.9 mb in February following a
build of 20.0 mb in January. At 612.2 mb, European stocks were 18.4 mb or 2.9%
below the same level a year ago and 41.0 mb or 6.3% below the seasonal norm. Within
products, the picture is mixed; residual fuel oil stocks dropped, while gasoline and
distillate stocks saw builds. Naphtha stocks remained unchanged from the previous
month.
Gasoline stocks rose by 0.7 mb for the third consecutive month, ending February at
113.3 mb. At this level, gasoline stocks showed a deficit of 5.2 mb or 4.4% below a
year ago and 6.6 mb or 5.5% less than the seasonal norm. The build in gasoline stocks
mainly reflects higher refinery output, as improved demand in the region, along with
higher exports to the US, capped a further increase.
Distillate stocks also rose in February by 0.4 mb following two consecutive months of
builds to stand at 397.1 mb, indicating a surplus of 2.8 mb or 0.7% below a year ago,
but 1.4 mb or 23.6% below the five-year average. The build came from higher refinery
output. Relatively weaker domestic demand also contributed to the build in European
distillate stocks. However, cold weather in the US led to a draw European middle
distillate stocks, capping the increase.
Residual fuel oil stocks fell by 2.0 mb, reversing the build of the previous month to end
February at 77.6 mb. This was 11.2 mb or 12.6% below the same time a year ago and
24.0 mb or 23.6% less than the seasonal average. Higher exports, especially towards
Singapore were the main reason behind the decline in fuel oil stocks. Naphtha stocks
remained unchanged in February to stand at 24.2 mb, showing a deficit of 16.3 mb or
9.1% with a year ago and 9.1 mb or 27.3% below the latest five-year average.
US
Preliminary data for March shows that US total commercial oil stocks rose by
2.1 mb, reversing the decline of the previous five consecutive months. At 1,037.0 mb,
inventories stood at 60 mb or 5.5% below a year ago in the same period, representing
a deficit of 36 mb or 3.4% below the latest five-year average. Within the components,
the picture was mixed; crude experienced a build, while products witnessed a draw.
US commercial crude stocks saw a build of 16.3 mb in March to stand at 380.1 mb,
the highest level since October 2013. At this level, US crude oil commercial stocks
finished the month at 11.1 mb or 3.0% above the five-year average, while they were
12.0 mb, or 3.1% lower than a year ago at the same time.
The build in crude commercial stocks was driven by lower crude refinery runs, which
fell by around 140 tb/d to stand at 15.1 mb/d. Refineries operated at 85.9% of capacity,
down from 87.3% the previous month. However, they were running 2.2 percentage
points (pp) higher than in the same period last year. It should be highlighted that during
the week ending 28 March, US crude stocks fell against expectation by around 2.4 mb
from the previous week, driven by the closure of the Houston Ship Channel to clean up
an oil spill, thus lowering crude imports. While total US commercial crude oil stocks rose in March, inventories at Cushing, Oklahoma dropped by 7.5 mb, to end the
month at 27.3 mb, 22.2 mb lower than in the same period a year ago.
Total product stocks fell further by 14.2 mb in March for the sixth consecutive month,
losing almost 108 mb to stand at 656.9 mb. At this level, US product stocks stood at
48.2 mb or 6.8% below a year ago at the same time, showing a deficit of 47.1 mb or
6.7% below the seasonal norm. All products saw a decline, with the bulk in gasoline.
Gasoline stocks declined by 13.4 mb in March, following a fall of 6.7 mb in February.
At 215.6 mb, gasoline stocks were 9.3 mb or 4.8% lower than in the same period a
year ago, and remained 4.3 mb or 2.0% less than the latest five-year average. A rise of
around 470 tb/d in apparent demand was behind the stock draw in gasoline
inventories. However, higher gasoline output limited a further drop in gasoline stocks.
Distillate stocks also fell by 1.5 mb in March to stand at 113.0 mb. At this level,
distillate stocks were 5.7 mb or 4.8% below a year ago and remained 25.5 mb or
18.4% lower than the seasonal average. The fall in middle distillate stocks came mainly
from higher apparent demand, which increased by around 170 tb/d to average
3.8 mb/d. The increase in distillate production limited a further drop in distillate stocks.
Residual fuel oil stocks fell by 0.4 mb to end March at 36.5 mb, which is 0.5 mb or
1.2% lower than a year ago and 1.4 mb or 3.6% below the seasonal norm. Jet fuel
stocks also fell by 2.3 mb to stand at 35.6 mb, down by 4.3 mb or 10.7% from the same
month a year ago and 5.2 mb or 12.7% below the latest five-year average.
US Strategic Petroleum Reserve sales
On 12 March 2014, the US Department of Energy announced that it would sell 5 mb of
medium sour crude from its Strategic Petroleum Reserve (SPR). The US SPR is
located along the US Gulf Coast and currently holds 696 mb of crude, divided in
434 mb of sour crude and 262 mb of sweet crude.
According to the US Energy Information Administration (EIA), a drawdown in the US
SPR in the past only occurred either to perform “test sales”, or in the case of
emergency disruptions. The first test sale was undertaken in 1985 and consisted of
around 1 mb. A second test sale took place in 1990, which amounted to less than
5 mb. Three months later, in response to the conflict between Kuwait and Iraq, which
disrupted some 4.3 mb/d, the first emergency release from the SPR was announced,
eventually amounting to 17.3 mb. The federal government once again released oil in
response to Hurricane Katrina in 2005 — this time 20.8 mb of crude oil — out of which
9.8 mb represented loans to refiners. This was part of a coordinated response with the
International Energy Agency (IEA) for the release of almost 60 mb of crude and
refined products by its members. The next emergency release took place in June
2011, when some 60 mb of strategic oil stocks were made available under a
coordinated release with the IEA, of which around 30.6 mb was US light sweet crude.
The recently announced test sale of 5 mb is largely due to test the logistics of moving
crude from the SPR to refiners. Surging US tight oil production has upended the
logistics of US crude markets. Major pipelines that traditionally moved oil from the
US Gulf have been reversed to move a glut of tight oil to refiners on the US Gulf Coast
(USGC). The government has said that the test sales are needed to appropriately
assess the system’s capabilities.
Following the EIA’s announcement, Nymex WTI crude oil prices fell by $2.04 to
$97.99/b at the end of the day, before rebounding five days later to the same level as
before the decision. The minimal lasting impact on crude oil prices is mainly due to the
fact that the amount is small, and will be delivered between 1 April and 10 May,
amounting to 125 tb/d over this period. As a consequence, the USGC may see a
minor decline in already reduced volumes of crude imports.
As a member of the IEA, the US is required to hold the equivalent of 90 days of net oil
imports in public and private storage. Currently, the US holds more than 200 days of
net oil imports, much higher than the mandated requirement. At the same time, due to
the surge in US domestic crude oil production, US crude net imports have fallen in
recent years to their lowest level since 1996, to average 7.6 mb/d in 2013. This
development would allow the US to sell off further amounts of crude held in its SPR
and at potentially higher volumes.
Japan
In Japan, total commercial oil stocks fell by 7.8 mb in February, reversing last
month’s build of 2.2 mb. At 148.1 mb, Japanese oil inventories are 7.8 mb or 5.0%
below what they were a year ago and 15.5 mb or 9.5% lower than the five-year
average. Within components, crude and product stocks fell by 0.4 mb and 7.4 mb,
respectively.
Japanese commercial crude oil stocks fell slightly in February, reversing the previous
month’s stock build, to stand at 88.8 mb. At this level, they are 2.6 mb or 3.0% above a
year ago at the same time, but remained 5.1 mb or 5.4% below the five-year average.
The stock draw in crude oil was driven by lower crude imports, which fell by around
50 tb/d or 1.2%, to average nearly 4.0 mb/d. At this level, crude imports were 11.0%
higher than a year ago at the same time. Refinery throughput saw a minor increase in
February, averaging 3.7 mb/d. At this level, it was 1.8% lower than the previous year at
the same time. Japanese refiners were running at 82.8% of capacity in February,
around 1.5 pp lower than in the previous month, but 0.2 pp more than in the same
period a year ago. Direct crude burning in power plants saw an increase of 6.3% in
February compared with the previous month, averaging 280.3 tb/d, and showing an
increase of 7.0% over the same period a year ago.
Japan’s total product inventories fell by 7.4 mb in February, reversing the build of last
month to stand at 59.3 mb. At this level, product stocks showed a deficit of 10.4 mb or
14.9% compared with a year ago at the same time and remained below the five-year
average by a deficit of 10.4 mb or 14.9%. Higher domestic sales — which rose by
180 tb/d or 4.9% in February to average 3.9 mb/d — were behind the fall in product
inventories. At this level, Japanese oil product sales were 1.1% lower than one year
earlier. A 1.5% decline in refinery output and 2.8% fall in oil product imports also
contributed to the drop in product inventories. With the exception of gasoline, all
products witnessed a stock draw, with the bulk coming from distillates.
Gasoline stocks rose by 0.9 mb in February for the second consecutive month to
stand at 13.0 mb, which is 0.6 mb or 4.3% less than the same time the previous year
and 1.0 mb or 11.0% below the five-year average. A decline of 8.4% in domestic sales
was behind the stock build, as well as stronger imports.
Distillate stocks fell by 5.6 mb in February for the sixth consecutive month to finish at
25.6 mb, which is 3.6 mb or 12.4% below the same period a year ago and 3.2 mb or
11.0% lower than the seasonal average. Within distillate components, jet fuel oil stocks
rose, while kerosene and gasoil dropped. In February, jet fuel inventories rose by 7.5%
on the back of lower domestic sales, which declined by almost 30%. Higher output also
contributed to this build. Kerosene stocks fell strongly by 36%, driven by lower
production combined with reduced imports. Gasoil inventories also fell by 5.5% on the
back of lower production, dropping by 2.8% combined with a 3.0% increase in domestic
sales.
Naphtha stocks fell by 0.6 mb, finishing the month of February at 8.0 mb, indicating a
deficit of 2.1 mb or 21% compared with a year ago and 3.4 mb or 21.2% below the
seasonal norm. The stock draw came from lower production, which declined by nearly
10%. A 20% decline in naphtha imports also contributed to this build.
Total residual fuel oil stocks dropped by 2.1 mb to end the month of February at
12.8 mb, which is 4.1 mb or 24.2% less than a year ago and 2.8 mb or 26.2% lower
than the five-year average. Within fuel oil components, fuel oil A stocks fell by 10.0%,
and fuel oil B.C stocks declined by 16.7%. The fall in fuel oil A stocks could be
attributed to higher domestic sales, which rose by 6.6%. The fall in fuel oil B.C stocks is
attributed to lower production.
China
The latest information showed Chinese total oil commercial inventories rose
strongly for the second consecutive month by 32.7 mb in February, following a build of
28.1 mb in January, to stand at 420.8 mb. Within the components, both commercial
crude and products rose by 10.2 mb and 22.5 mb, respectively. The build in crude
commercial stocks came mainly from lower crude throughput outpacing a decline in
crude production.
Total product stocks in China also went up in February, with the bulk of the build
coming from an increase of 15.6 mb in diesel inventories. Gasoline and kerosene
stocks rose by 6.2 mb and 0.7 mb, respectively. The build in product stocks came from
weaker demand during the Lunar New Year holiday.
Singapore and Amsterdam-Rotterdam-Antwerp (ARA)
At the end of February, product stocks in Singapore rose by 3.5 mb for the second
consecutive month to stand at 42.9 mb. With this build, product stocks in Singapore
represented a surplus of 3.5 mb or 1.5% over the same period the previous year.
Within products, the picture was mixed; light and residual fuel oil saw a build, while
middle distillates experienced a drop.
Light distillate stocks rose by 2.5 mb in February — the third consecutive month — to a
record high of 14.0 mb. At this level, stocks stood 2.5 mb or 3.4% higher than a year
ago during the same period. At the same time, fuel oil stocks also rose by 1.1 mb,
ending February at 18.6 mb, but remained 3.0 mb or 13.7% below a year ago in the
same period. Meanwhile, middle distillate stocks fell slightly by 0.1 mb in February as
arrivals remained relatively low. At 10.3 mb, middle inventories are almost in line with
the previous year.
Product stocks in Amsterdam-Rotterdam-Antwerp (ARA) declined by 3.3 mb in
February, after an increase of 5.7 mb in January. At 30.2 mb, product stocks in ARA
stood at 3.1 mb or 9.3% below a year ago at the same time. All products saw a drop,
with the exception of gasoil.
Fuel oil stocks fell by 2.5 mb to end the month of February at 4.1 mb, indicating a
deficit of 0.5 mb or 10.5%. Gasoline stocks fell by 0.9 mb in February, reversing the
build of the last three months to stand at 7.6 mb, which is 0.6 mb or 7.7% lower than
the same period last year. This stock draw was driven by a relative improvement in
demand from the region. Gasoil stocks rose by 1.1 mb, ending January at 14.7 mb.
Despite this build, gasoil stocks stood at 2.8 mb or 16% below the previous year.
