The Oil Market Healing Process Continues
EIA reported a relatively more bullish oil storage report than we expected. As we have been saying over the past 3 weeks, EIA overstated commercial crude storage by ~8 to ~9 million bbls, and following today's report, there are still 2 to 3 million bbls leftover.
Coming into this report, we expected a crude build between 7 to 8 million bbls. The big build was driven by lower crude exports and flat imports. In EIA's report, however, it reported very elevated crude exports and very low imports. Simultaneously, it reported a large adjustment of ~1.2 million b/d.
As we have said publicly, EIA has solved its issue of overstated adjustment if you factor in real-time crude imports/exports vs reported. Our modified adjustment shows the last 3-week average to be close to zero.
What does this even mean?
If our modified adjustment was consistently negative, then it implies that EIA has overstated US oil production. If it is consistently positive, then it implies EIA has understated US oil production. With the modified adjustment coming in flat, it implies that US oil production today is around ~13.2 million b/d.
Over time, we should start to see the real-time tracking figures trend lower. Keep in mind the chart above included the "transfers to crude oil" prior to the November 1st EIA report.
The Healing Process Continues
Refinery throughput really surprised to the upside this week coming in at ~16 million b/d. Because of the upside surprise, we now see a much larger draw for next week.