Macquarie Strategists Forecast USA Crude Inventory Build

In an oil and gas report sent to Rigzone late Monday by the Macquarie team, Macquarie strategists revealed that they are forecasting that U.S. crude inventories will be “up modestly (+1.9 million barrels) for the week ending October 4”.

“This compares to our early look for the week which anticipated a 6.7 million barrel build, and a 3.9 million barrel build realized for the week ending September 27,” the strategists noted in the report.

“Relative to our initial view for the week, we again look for tighter crude and similar aggregate product balances,” they added.

In the report, the strategists noted that, for this week’s crude balance, from refineries, they model crude runs slightly higher “+0.1 million barrels per day”.

“Among net imports, we model a large reduction, with exports up slightly (+0.1 million barrels per day) and imports down heavily (-0.7 million barrels per day) on a nominal basis. Timing of cargoes remains a source of potential volatility in this week’s crude balance,” they said.

“From implied domestic supply (prod.+adj. +transfers), we look for a healthy increase (+0.5 million barrels per day) on a nominal basis, as Gulf of Mexico disruptions wane. Rounding out the picture, we anticipate a smaller increase in SPR inventory (+0.3 million barrels) on the week,” they added.

The strategists went on to state in the report that, among products, they “look for draws in gasoline (-2.6 million barrels) and distillate (-2.8 million barrels) with jet stocks up slightly (+0.1 million barrels)”.

“We model implied demand for these three products at ~14.2 million barrels per day for the week ending October 4,” they continued.

In a separate report sent to Rigzone by the Macquarie team last Thursday, Macquarie strategists outlined that, in the U.S. Energy Information Administration’s (EIA) weekly petroleum status report scheduled to be released on October 9, they saw “potential for a large commercial U.S. crude stock build”.

“Looking ahead to next week’s release, we see potential for a large commercial U.S. crude stock build (+6.7 million barrels), with runs up slightly (+0.1 million barrels per day), nominal implied supply stepping up as GOM disruptions abate (+0.5 million barrels per day), net imports little changed, and a similar increase in SPR inventory (+0.6 million barrels) on the week,” they said in that report.

“We note potential for volatility in these figures given the incomplete nature of this week’s data. Among products, our preliminary expectations point to healthy draws in gasoline (-2.7 million barrels) and distillate (-3.0 million barrels), with a build in jet (+0.5 million barrels),” they added.

In this report, the Macquarie strategists highlighted that, that week, “the EIA reported builds in commercial crude (+3.9 million barrels), gasoline (+1.1 million barrels) and Cushing (+0.8 million barrels), with draws in distillate (-1.3 million barrels) and jet (-0.7 million barrels)”.

“In total, crude and product balances came in loose relative to our expectations,” they pointed out.

The strategists stated in that report that, within the crude balance, “runs were well below our expectation (-0.5 million barrels per day), with net imports modestly higher than expected on a nominal basis (+0.2 million barrels per day)”.

“Implied dom. supply (prod.+adj.+trans.) was 13.6 million barrels per day nominally (we modeled ~13.8 million barrels per day), with the trailing four week average at 13.7 million barrels per day nominally,” they added.

“When adjusted for 3rd-party estimated waterborne flows, this week’s implied supply figure again looks quite strong, particularly considering another wave of GOM outages,” they continued.

The strategists went on to state in that report that, within products, “implied demand was slightly below our expectation this week, with gasoline+distillate+jet at 14.1 million barrels per day (vs. ~14.2 million barrel per day est.), with the trailing four week average at 14.2 million barrels per day vs. 13.9 million barrels per day for the same four weeks last year”.

“Total disappearance (impl. demand + exports) for those three products was also close to our expectation at 16.7 million barrels per day (vs. ~16.6 million barrel per day est.), with the trailing four week average at 16.7 million barrels per day vs. 16.1 million barrels per day for the same four weeks last year,” they added.

“Meanwhile, crude runs are up 0.1 million barrels per day year on year over the same period,” they continued.

To contact the author, email andreas.exarheas@rigzone.com