The meeting among OPEC+ producers to discuss about revision of output cuts was inconclusive. While a number of OPEC+ producers agreed that weak oil demand outlook might justify more reduction in output, it’s yet to know how much more is needed. A greater problem is compliance. As we noted in the previous report, OPEC+ has reached a compliance level of about 100%. However, this was a result of some producers cutting excessively to offset the non-compliant ones. Producers who were exempted from the deal have presented another risk on the demand/supply outlook.
The report from the US Energy Information Administration (EIA) shows that total crude oil and petroleum products (ex. SPR) stocks plunged -16.8 mmb to 1402.34 mmb in the week ended October 16. Crude oil inventory slipped -1 mmb (consensus: -1.02 mmb) to 488.11 mmb. Stockpile dropped in 4 out of 5 PADDs. However, PADD s (Midwest) inventory added +2.1 mmb during the week. Cushing stock added +0.98 mmb to 60.42 mmb. Utilization rate fell further, by -2.2 percentage points, to 72.9% while crude production slipped -0.6M bpd to 9.9M bpd for the week. Crude oil imports decreased -0.17 bpd to 5.12M bpd in the week.
Concerning refined oil product inventories, gasoline inventory gained +1.9 mmb to 227.02 mmb as demand dropped -3.3% to 8.29M bpd. The market had anticipated a -1.83 mmb decrease in stockpile. Production fell -3.3% to 0.93M bpd while imports jumped +27.9% to 0.51M bpd during the week. Distillate fell -3.83 mmb to 160.72 mmb. The market had anticipated a -1.74 mmb decrease. Demand plunged -14.1% to 3.59M bpd. Production dipped -3.2% to 4.13 mmb while imports dipped -5% to 0.15M bpd during the week.
A day earlier, the industry-sponsored API estimated that crude oil inventory added +0.58 mmb during the week. For refined oil products, gasoline inventory dropped -1.6 mmb while that for distillate slumped -6 mmb.