Quick assessment: The report is neutral to bullish, but do not chase prices higher. Buy on dips. Remember that Today-Friday is the OPEC meeting and that could change everything.
Inventories
Crude, 426.5 mln bbls, down 5.9 mln bbls. Down 16.2% y-o-y.
Gasoline, 240 mln bbls, up 3.3 mln bbls. Down 0.8% y-o-y.
Distillate, 117.4 mln bbls, up 2.7 mln bbls. Down 23% y-o-y.
Demand
Refiner inputs, 17.701 mbd, up 196k bpd. 4-week avg, 17.433 mbd, up 0.8% y-o-y.
Gasoline, 9.326 mbd, down 553k bpd. 4-week avg, 9.468 mbd, down 0.9% y-o-y,
Distillate, 3.825 mbd, down 579k bpd. 4-week avg, 4.013 mbd, up 2.0% y-o-y.
Production
Gasoline, 9.964 mbd, down 117k bpd. 4-week avg, 9.930 mbd, down 1.5% y-o-y.
Distillate, 5.468 mbd, up 357k bpd. 4-week avg, 5.3 mbd, up 1.4% y-o-y.
Crude oil imports, 8.242 mbd, up 143k bpd. 4-week avg, 8.08 mbd, up 0.3% y-o-y.
Crude oil exports, 2.374 mbd, up 344k bpd. 4-week avg, 2.074 mbd, up 167.7% y-o-y. Product exports, 5.223 mbd, up 541k bpd. 4-week avg, 4.966 mbd, up 8.4% y-o-y.
Combined crude and product exports, 7.597 mbd, up 885k bpd.
Summary and analysis.
While crude inventories fell more than expected, crude imports are back up on a year-over-year basis and demand for gasoline weakened and is now negative y-o-y. Distillate demand was up and is up y-o-y, but total distillate consumption is much lower than gasoline.
Meanwhile refiner inputs of crude are near all-time highs and probably unsustainable at these levels. Production of gasoline is down, but distillate production is up. On a separate note, the increase in distillate production wil probably result in a steady re-building of inventories
The bullish news is that exports, for both crude and products, jumped sharply. This is all the more impressive given the strength in the US dollar. If exports can rise even with the dollar's strength then that suggests any renewed weakness in USD will result in an even faster growth in exports. This is bullish.
Taken alone, this report indicates that you should be buying oil on dips, however, there is still the OPEC meeting to get through. That is this Today and Friday. It could change everything, short-term.
