Analysis: EIA Sees Crude Stocks Jump as Refiners Cut Back


   
Karim Bastati
DTN Analyst

   VIENNA (DTN) -- U.S. commercial crude oil inventories recorded the largest 
weekly jump in three years, Energy Information Administration data showed 
Wednesday (2/25). The outsized build reflected a pullback in refining activity, 
which coincided with an equally sized swing in net imports, and should thus not 
ring demand alarm bells too loudly.

   EIA reported that crude inventories expanded by 16 million bbl in the week 
ending February 20, marking the largest weekly build in three years. This came 
as refiners, who so far this year have been operating for longer and at higher 
rates than usual, cut back crude inputs by 416,000 bpd from the prior week. At 
the same time, net imports jumped 413,000 bpd amid a bump in arrivals and a 
decrease in exports. The timing of these factors was partially responsible for 
the large swing in inventories.

   Still, these phenomena would account for only a little more than a third of 
last week's 16 million bbl build. EIA's adjustment factor swung from a negative 
1.4 million bpd in the week ending February 13 to a positive 1.34 million bpd 
last week. Large adjustment factors -- around 8% of the supply demand balance 
in the last two weeks -- and the wild week-on-week swings may come down to 
timing. Exporters, for instance, have up to three days to report departures to 
customs, meaning that cargoes leaving toward the end of a reporting week may be 
captured by inventory data in one week and export data in the next.

   Faults in weekly data may provide an alternative explanation. The EIA has 
just recently adjusted higher its weekly crude production estimates after 
months of undercounting U.S. output. Missing supply or demand sources, however, 
would show up as a consistently large adjustment factor in either direction, 
and not a 2.74 million bpd week-on-week swing as was recently the case.

   Last week's 16 million bbl build followed a 9 million bbl draw, another 
indication that recent swings in the data are most likely a matter of timing. 
Currently, commercial inventories are just 1.3% higher than at the same time 
last year and are still trailing the five-year average by some 3%.

    




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