Daily Energy Report
China crude inventories are rising, US oil inventories build, LNG & CO2, Russia’s gasoline export ban, ESPO blend discount, Climate policies meet reality, France’s electricity test, and more.
Chart of the Day: China’s Crude Inventories are Increasing
Summary
Figure (1) above shows China’s crude oil inventories, commercial and strategic. It shows that crude oil inventories have been rising in the last five weeks. Panel A is used for clarity of the trends. Panel B is the same data, but it starts from zero to avoid hyping the trend. The change is small once we look at it in light of total inventories.
EOA’s Main Takeaways
Contrary to our expectations, Chinese crude inventories increased. But we believe they will decline again. The increase was caused by:
Oil consumption was flat
Refinery runs declined
Exports declined
Imports increased
The decline in refinery runs, and consequently oil exports, was caused by two factors:
The inability to increase exports because refineries used up most of their assigned quotas
Low margins.
The first one is related to government regulation. The second one is related to market conditions.
We believe the above condition put downward pressure on oil prices. Regardless, we believe oil inventories will resume their downward trend.
Story of the Day
API: Major Build in Oil Inventories
Summary
The American Petroleum Institute (API) reported yesterday a significant build in crude oil inventories—a whopping of 11.9 mb. However, it reported a decline of 400,000 barrels in gasoline inventories and a 2 mb decline in distillates.
Based on the API numbers, US crude oil inventories are at their lowest levels since 2013 for this time of the year.
