Macquarie Strategists Predict Near 6MM Barrel USA Crude Inventory Drop

In a report sent to Rigzone this week by the Macquarie team, Macquarie strategists revealed that they are forecasting that U.S. crude inventories will be down by around 5.8 million barrels for the week ending November 22.

“This compares to our early look for the week which anticipated a 3.3 million barrel draw, and a 0.5 million barrel build realized for the week ending November 22,” the strategists said in the report.

“While our crude balance appears tighter than our initial expectations, on an aggregate basis, our product balances are modestly looser,” they added.

“For this week’s crude balance, from refineries, we model crude runs up solidly (+0.4 million barrels per day). Among net imports, we model a very large decrease, with exports modestly lower (-0.3 million barrels per day) and imports down sharply (-1.9 million barrels per day) on a nominal basis,” they continued.

The strategists said in the report that timing of cargoes remains a source of potential volatility in this week’s crude balance.

“From implied domestic supply (prod. +adj.+transfers), we look for a large increase on a nominal basis (+1.0 million barrels per day). Rounding out the picture, we anticipate a smaller increase in Strategic Petroleum Reserve inventory (+1.2 million barrels) on the week,” the strategists noted in the report.

Focusing on products, the strategists said in the report that they “look for a modest draw in gasoline (-1.3 million barrels), with distillate (-0.1 million barrels) and jet stocks (+0.1 million barrels) nearly flat”.

“We model implied demand for these three products at ~14.4 million barrels per day for the week ending November 22,” the strategists stated in the report.

In a report sent to Rigzone last Thursday by the Macquarie team, Macquarie strategists outlined that they “see potential for a U.S. crude stock draw” in the U.S. Energy Information Administration’s (EIA) next weekly petroleum status report.

“Looking ahead to next week’s release, we see potential for a U.S. crude stock draw (-3.3 million barrels), with runs up (+0.4 million barrels per day), nominal implied supply sharply higher (+1.0 million barrels per day), net imports sharply lower (-1.2 million barrels per day), and a similar increase in SPR inventory (+1.4 million barrels) on the week,” the strategists stated 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 a draw in gasoline (-2.8 million barrels), with distillate down slightly (-0.3 million barrels), and a build in jet (+0.6 million barrels),” they added.

In its latest weekly petroleum status report at the time of writing, which was released on November 20 and included data for the week ending November 15, the EIA revealed that “U.S. commercial crude oil inventories (excluding those in the Strategic Petroleum Reserve) increased by 0.5 million barrels from the previous week”.

“At 430.3 million barrels, U.S. crude oil inventories are about four percent below the five year average for this time of year,” the EIA added in its report.

The EIA’s next weekly petroleum status report will be published later today and will include data for the week ending November 22.

In a market analysis sent to Rigzone this morning, Milad Azar, Market Analyst at XTB MENA, said “recent U.S. data showing a larger than expected drop in crude inventories points to a tighter market in the U.S. and could support the market temporarily”.

Azar warned in the analysis that crude oil futures “could remain under pressure, struggling to recover from two consecutive days of decline”.

“Markets are assessing the impact of a newly brokered ceasefire in the Middle East. This agreement could be a key concern for global oil markets as traders are closely monitoring the stability of the ceasefire,” Azar added.

“In the short term, the de-escalation of geopolitical tensions could limit the upside potential for crude prices, as risks of immediate supply disruptions recede. However, should the ceasefire fail, prices could quickly rise in response to the renewed risk of supply constraints,” Azar went on to state.

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