So what drove the build?
The increase was predominantly driven by weaker crude oil exports over the week, with them averaging 1.31MMbbls/d - down from 2.68MMbbls/d seen in the previous week. This fall shouldn’t come as too much of a surprise given the general narrowing that we have seen in the WTI-Brent discount lately. Meanwhile, crude oil imports over the week were marginally lower at 7.75MMbbls/d. The biggest WoW increase in imports was from Venezuela, with imports up 211Mbbls/d to average 603Mbbls/d. Meanwhile, imports from Mexico fell by 475Mbbls/d.
While the total crude oil build should be seen as bearish, the fact that crude oil inventories at the WTI delivery hub, Cushing, fell by a further 1.34MMbbls over the week should prove relatively constructive for prompt WTI time spreads. Cushing inventories now stand at 22.39MMbbls, the lowest level since late 2014, and sees stocks falling closer towards the 5-year low. All eyes will be on how quickly Syncrude ramp up supply, as this could reverse this trend.
Moving to products, and gasoline demand continues to be strong, with it basically matching the record levels seen back in early June (9.88MMbbls/d). Robust demand meant that gasoline inventories fell by 2.54MMbls over the week. However, gasoline inventories remain comfortably above the 5-year average.
Meanwhile, we continue to see the seasonal build in distillate fuel oil inventories, with a 2.98MMbbls increase over the week. However despite this build, inventories in the US still remain below the 5-year low, and so at least in the near term should continue to offer support to middle distillates.