US Product Storages Start The Year With Low Builds And What That Means Going Forward

In our weekly crude storage outlook reports, we've repeatedly pointed out that the oil market will be fixated on the weekly product figures as opposed to the crude figure. Given that we saw US crude storage build ~27 million bbls in the last two weeks, and oil has rallied nonetheless, this was a good take.

In our view, the oil market can see through why crude storage is building. Given the low levels of refinery throughput today, crude storage is building, but product storage is flat.

Remember that we said the beginning of the year is the most important period for product storage. Seasonally speaking, the last few weeks of the year into the first few weeks show the largest builds. To give you a sense of how much gasoline, distillate, and jet fuel normally build, this is the 5-year average statistic:

• From the middle of November to the middle of February, the 5-year average build is ~66 million bbls.

• For this year, we have only seen a build of ~23 million bbls so far.