Total petroleum stocks up 6.1 million barrels

Following huge draws of 11.9 million bbls (12/16) and 12.9 million (12/23) bbls we finally saw a stock build of 6.1 million bbls last week. Given that we are still sitting on a pretty big glut, normally a 6.1 million build in total petroleum stocks would be bearish, but following 3 weeks of draws totalling 27 million bbls, it’s hard to get too excited about this build. The real story of the week was consumption, which dropped over 2 million bbls a day compared to the prior week for a weekly decrease of nearly 16 million bbls.
Looking back a few years this appears to be a seasonal drop probably due to the Christmas holidays. I know some people travel for the holidays, but a lot of folks just take a week or two off and relax until the new year. With schools and colleges out, entire fleets of buses pretty much just shut down for a few weeks. The result is a dip in consumption that we see year after year. This year’s dip was a few million barrels larger than last year, but nothing to be worried about yet.
With the year now over, we can look at the full year reconciliation below for some interesting comparisons of 2015 and 2016.
Full year production was down 136 million bbls, but was more than offset by NGL production and crude and product imports increasing 321 million. Offsetting the increased inflows, product consumption and exports were up, leaving the total 2016 stock build at 47 million bbls compared to a 170 million bbls build in 2015. Add them together and that’s about the size of the glut we are now starting to work off. Do note that 2016 had an extra reporting week which throws off the comparison by a little.
Crude stocks were down big, product stocks were up big, and this report came during a holiday week with strong seasonal consumption patterns. With the holiday, it also probably meant that a lot of the survey monkeys who normally fill out EIA forms were out and their backups sent them in. All in all it was an oddball of a report, so I am inclined to just raise my eyebrow and wait for next week’s report. The build was a little bearish but given the trend and magnitude of prior draws I think the bulls have the upper edge this week, but we really need to keep an eye on consumption. [Scott Anderson — Seeking Alpha]