Global crude oil inventory builds paused this week while Kayrros L48 production forecast matched EIA reports of large month-on-month gains via Kayrros
Q1 hedge fund letters, conference, scoops etc, Also read Lear Capital: Financial Products You Should Avoid?
Hedge fund managers are among the wealthiest people in society, and many of them choose to give back through their own foundations. David Abrams of Abrams Capital is one hedge fund manager who has his own foundation. We can get an idea about his favorite hedge funds by seeing which funds his foundation invested in. Read More
- Kayrros reported a build in global inventories (excluding the US) this week while the EIA reported a draw in US commercial crude oil inventories.
- This means a relatively flat week for crude storage, after a nearly continuous build since early April that has added large volumes to global inventories.
- Inventories in Europe built this week, led by the ARA region.
- Inventories also built significantly in China. Chinese crude inventories have built continuously since early April, linked to the early start of the refinery maintenance season in China and highlighting potentially lower demand.
- Offsetting these moves, the Middle East saw a large draw in crude inventories. This reverses last week’s move as we see draws in Egypt, Turkey, Iran.
- The relatively unchanged number for global crude inventories coincides with an almost unchanged Brent 6m vs 1m time spread (adjusted for the roll).
- This happens after the Brent 6m vs 1m spread saw a continuous narrowing since the end of April in line with the observed build in global inventories.
- Dubai 6m vs 1m time spreads, however, widened significantly this week, driven by the prompt spread as it approached expiry.
- The WTI-Brent spread continued its rout this week, reaching below $10/b.
- On Thursday, the EIA reported a large increase in Lower 48 (excluding GoM) crude production month-on-month from February to March.
- This is in line with the Kayrros forecast published on May 29.
- Bottlenecks, however, may come earlier than expected with this rate of production increase. For more insights, please see the Kayrros story “Permian pipeline set to be a future bottleneck for production growth”.
Below is a recap of publications by Kayrros for the week ending June 1:
1. Kayrros measured a global build between May 21 and May 28, despite a significant draw in MENA.
- Inventory builds in China and Europe accounted for the bulk of this movement. Inventories in the Caribbean and LATAM also increased.
- Inventories in MENA offset this movement. Draws in Iran, Egypt and Turkey were the main drivers.
2. 10- day floating inventories drew between May 21 and May 28, while 30-day floating inventories kept dipping below their lowest levels since December 2016.
- Singapore & the Strait of Malacca and China accounted for the bulk of this movement, with their 10-day idle inventories decreasing.
- Venezuela and North West Europe offset these draws with a 10-day inventory build. Inventory levels in North West Europe are the highest measured since September 2017.
- The Middle East Gulf, China, and the Mediterranean Sea drove the 30-day floating storage movement, offset by a build in Venezuela.
3. Kayrros measurements for US crude oil inventories revealed draws in the tracked areas, except in the Gulf Coast, between May 20 and May 27.
- Cushing led the draw, with inventories at the hub decreasing between May 20 and May 26.
- West Texas inventories also decreased due to draws in Wink and Wichita Falls.
- In the Gulf Coast, Saint James inventories increased marginally.
4. Global disruptions measured by Kayrros dropped to the lowest level of 2018.
- Disruptions in Libya rose this week.
- There were Reuters reports of a 120 kb/d shut-in at Massala field due to hot weather last Wednesday. Since then AGOCO reported a recovery in production capacity recovered to 220 kb/d on May 25 after having fallen to 146 kb/d on May 23.
- There was a small drop in the level of disruption in Iraq.
- Disrupted production in Algeria fell for the second week in succession.
- Subtropical storm Alberto hit the Gulf of Mexico this week.
- As a result, some platforms were evacuated as a precaution. As of yet, there are no official figures to quantify any disruption in production.
- In Canada, there was a very minor crude oil spill at the Kinder Morgan station just north of Kamloops, B.C. Only 100 liters of crude were spilled, but this came just two days before the Trans Mountain Pipeline Expansion sale was agreed on May 29.