US Crude Storage Won't Build In Maintenance Season

EIA's oil storage report today was mildly bullish. EIA reported a draw of 2.1 million bbls for commercial crude storage or less than the ~4 million bbls we had expected. The biggest delta was in the refinery throughput figure (16.3 million b/d versus our 16.65 million b/d). This delta explains the entirety of the difference and illustrates that the US refinery maintenance season is underway.

Looking at the report, there are several bullish factors we can point to that illustrate 2023 is unlike 2022.

The first big one is the implied demand for gasoline, distillate, and jet fuel. You can see in the chart above the y-o-y difference. Despite rising fuel prices and concerns over a possible recession, implied oil demand for the big 3 is holding up. Although it's nowhere near the level we would like (2019), it is still far better than what we saw last year.

On the total demand front, we are in-line with 2021 and just a hair below 2019. This bodes well for demand going into winter.

Here is the breakdown of all the demand variables:

But as the title of this OMF suggests, this refinery maintenance season will be bullish. Why? Based on everything we are seeing, there's a good chance US crude storage won't build as refinery throughput falls. In addition, product storage is likely to trend lower with demand holding up. The combination of the two should allow for a lower baseline (storage) going into the highest deficit quarter of the year.

Here is our US commercial crude storage outlook for the next 3 weeks: