US Oil Storage Data Trends Bullish, But More Is Needed To Change Sentiment
EIA reported another supportive oil storage report today. For oil bulls, 2 reports do not make a trend, but it certainly goes a long way in calming fears about Q2 oil market balances being in a surplus.
Similar to last week's OMF, we do have to point out a few hidden variables that are not apparent to the naked eye.
Our modified adjustment shows a new record high in EIA adjustment. Despite crude drawing, the modified adjustment added ~15 million bbls to the balance.
Refinery throughput is starting to ramp, the 3-2-1 crack spread is starting to fall, which may signal that product storage draws will be lower than we've seen in the past. We will need underlying demand to pick up for product storage draws to be material.
The velocity of the recovery we are seeing in the implied oil demand data is slowing a bit. Gasoline will need to do the heavy lifting come this summer.
So while this report was bullish on the surface, we don't feel the same way about the headline figures. While total liquids saw a hefty draw, higher refinery throughput, lower product storage draws, and lower refining margins are giving me something to ponder about.