EIA Inventories Rise Again
Crude oil has come under significant selling pressure once again this week, with price action erasing the gains of the recent recovery. The EIA has reported a further, record build in crude inventories.
For the week ending April 10th, the Energy Information Administration reported that US crude levels surged by a record 19.2 million barrels. This increase comes on the back of the prior week’s 15.2 million barrel increase (which was a record itself). It now brings the total inventories level up to 503.6 million barrels. This is roughly 6% above the five year average for this time of year.
Supply/Demand Imbalances Growing
The increase, which was well above the 11 million barrel level forecast, has blunted the recovery in crude prices and sent the market crashing lower once again. Despite the broader pick up in risk sentiment over recent weeks, the crude market is now once again seeing a heavy supply/demand imbalance. This looks set to keep the market anchored to the downside in the near term.
Fuel Demand Plummeting
The EIA cited the many lockdowns underway around the world as the reason for the drop in fuel demand recently. Demand has slumped by around 30%.
Gasoline demand, in particular, is down 32% on this time last year. This is due to the reduction in journeys being seen as a result of stay-at-home orders. Total products supplied over the last four weeks, which is used as a proxy for gauging demand, was down 18.5% on this time last year.
Refiners Cut Operating Levels Again
Looking at the rest of the data, refiners were seen cutting operating capacity once again to just 69% of total operating capacity. This level is now at its lowest since September 2008. Regionally, crude storage at the Cushing delivery hub in Oklahoma was up by 5.7 million barrels again last week. This takes the total level to 55 million barrels. The EIA noted that total storage capacity there is 76 million barrels. At the current rate, the facility could be full by Mid-May.
Gasoline & Distillate Inventories Rise
US gasoline inventories were also higher last week. These rose by 4.9 million barrels to a record high of 262.2 million barrels. Distillate inventories, which include diesel and heating oil, were also higher last week. These rose by 6.3 million barrels to 129 million barrels. This increase was far above the 1.4 million barrel rise expected.
Crude Testing 2020 Lows
The sell-off in crude this week has seen price trading back down to test the 2020 lows around 19.40 where the supporting trend line is stemming the decline for now. However, while price remains below the 26 level, the risk of a further move lower towards 17.12 and 1072 looks to be growing.