- For the week ending May 27th, Kayrros reported a build in global (excluding the US) crude inventories.
- The build in global inventories was driven by Egypt, Turkey, and Iraq. Crude inventories in Egypt built significantly, while inventories in Turkey and Iraq reached two-year highs.
- Inventories also built in LATAM and Europe.
- On the other hand, crude inventories drew in China and Asia-Pacific, a correction from the trend observed in recent weeks.
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- This global build confirms the rebound observed by Kayrros in global inventories since early April (when deseasonalizing US data).
- This trend is continuing to correlate well with moves in times spreads of crude oil benchmarks globally.
- Brent 6m vs 1m time spreads narrowed to -$1.3/b last week, displaying a continued high correlation with Kayrros global crude oil inventories.
- The effect of a global build in inventories has yet to materialize on Dubai time spreads as much as it has materialized on Brent time spreads. We will be watching closely for a confirmation of the trend of builds in MENA and Asia-Pacific (including China) to validate this.
- The large build of 5.8 MMb reported in the US by the EIA looks even larger when considering seasonality as we enter a period of typical draws in US crude oil inventories.
- The WTI-Brent spread continued to widen this week, as it has since early May 2018, driven by this build of US crude inventories.
- The EIA reported on May 23rd crude inventories at 36.1 MMb in Cushing, Oklahoma for the week ending May 18th, down 1.1MMb from the previous week. This is in line with Cushing inventories reported by Kayrros on May 14th and May 20th.
- We will be watching closely the EIA numbers against their seasonal behavior in the coming weeks.
- Crude inventories built in Venezuela last week. In the nearby island of Curacao, inventories built to their highest level since May 2016.
- PDSVA, the state-run Venezuelan oil company, operates the 335kbd Isla Refinery on the island of Curacao.
- This comes after US oil major ConocoPhillips seized assets owned by PDSVA on the island after an international arbitration.