A weekly build against an annual loss
For the week ended July 31, commercial crude oil stocks excluding the strategic reserve rose 2.5 million barrels to 407.0 million barrels. The Strategic Petroleum Reserve fell 2.8 million barrels to 304.8 million barrels, against 403.0 million barrels a year earlier. Year on year, commercial stocks are down 3.9 per cent and the strategic reserve is down 24.4 per cent.[1]
The two tanks do not do the same job. Commercial stock is the weekly balance of refiners and traders, and price reads it every week. The strategic reserve is the buffer that comes into play when a route or a facility shuts; it answers to the depth of an interruption scenario rather than to the daily price. Losing 16.7 million barrels on the commercial side and 98.2 million barrels on the strategic side over a year means the real buffer thinned during a period when the visible balance stayed calm. An alternative reading matters here: the strategic decline may come from sale or exchange programmes, which is not the same thing as consumption.[1]
Distillate is the grade under strain
In the same week total motor gasoline stocks declined to 209.7 million barrels and distillate fuel stocks to 107.2 million barrels, with distillate falling 3.5 million barrels. Propane and propylene stocks rose to 103.1 million barrels and are 21.7 per cent above the year-earlier level. Crude oil input to refineries was 17.153 million barrels per day, domestic production 13.804 million barrels per day and total products supplied 20.970 million barrels per day.[1]
The distillate draw has to be read together with the build on the crude side. Crude input to refineries stands high at 17.153 million barrels per day; with another week of distillate draw at that level, what closes the gap is imports or a shift in product yield rather than additional crude runs. The direction of the distillate line in the next weekly report is the cheapest way to test that distinction.[1]