Distillate Inventories Rise Less than Expected in June 12 Week
Crude Oil Inventories Fall Again as Production and Demand Fall
Distillate inventories
The EIA (U.S. Energy Information Administration) released its Weekly Petroleum Status Report on Wednesday, June 17. The report said distillate inventories rose by 0.1 MMbbls (million barrels) to 133.6 MMbbls in the week to June 12. Analysts were expecting inventories to rise by 0.95 MMbbls.
As you can see in the above chart, inventories remain in the middle part of the five-year range.
What this means
A less-than-expected rise in distillate inventories is bullish for distillate prices. In turn, it’s positive for refiners’ margins like Marathon Petroleum (MPC) and Tesoro (TSO). They account for ~2.3 % of the iShares U.S. Energy ETF (IYE). It’s also positive for MLPs (master limited partnerships) like MPLX LP (MPLX) and Tesoro Logistics LP (TLLP) that carry refined products, as well as refining MLPs like Northern Tier Energy (NTI), Calumet Specialty Products Partners (CLMT), and CVR Refining (CVRR).
Tesoro Logistics accounts for ~2.5% of the Alerian MLP ETF (AMLP).
Usually, if the actual rise in inventories is less than analysts’ expectations, it implies that demand was more than anticipated, or that supplies were less than anticipated. This is bullish for distillate prices. However, if the rise is more than analysts’ expectations, it implies that demand was less than anticipated or that supplies were more than anticipated. This is bearish for distillate prices.
Background
Distillates, or fuels like heating oil and diesel, are also an important group of fuels. They’re used for purposes ranging from transportation to heating. Distillate demand also drives crude oil demand and crude oil prices. So, energy investors watch distillate inventories closely.
In the next part of this series, we’ll look at last week’s demand and supply trends.
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