US crude stocks draw eight weeks in a row

The declining trend in US crude inventories continued last week as total crude stocks dropped more than 3.3m bbl to 463m bbl. Inventories have now drawn by over 72m bbl from their peak earlier this year although the pace of decline at Cushing has waned in the past few weeks. Gasoline stocks showed a draw of 1.2m bbl after two weeks of builds but total petroleum stocks were roughly flat thanks to seasonal builds in propane. US production continued its push higher, hitting 9.53m b/d, its highest level since July 2015. Both refinery demand and utilization ticked lower while crude exports moved higher.

Are US crude balances really tightening? The draw in stocks is significant, if expected according to past seasonal patterns while the opening up of the global market to US crude has helped act as a release valve. However, the widening spread between Brent and WTI—at over USD 4.20/b it is its widest since the end of 2015—and the persistent contango at the front of the WTI curve compared with a small backwardation in Brent suggests the market may be anticipating a return to inventory builds over autumn.

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