EIA DATA: Distillate stocks sink again on higher demand, exports

Quantum Commodity Intelligence – US distillate fuel stocks tumbled for a seventh straight week to hit a fresh two-month low at the start of March, as domestic demand continued to heat up and exports picked up while output struggled again.

Distillate inventories slumped 4.1 million barrels in the week ending March 1, the biggest weekly fall since May last year. This left stocks just above 117 million barrels, the lowest level since mid-December.

The fall outpaced the 665,000-barrel drop expected by analysts polled by Reuters and the 1.8-million-barrel fall flagged by the API on Tuesday, causing NY Harbor ULSD futures to rally.

The most liquid April contract jumped nearly 1.5% in the first half hour after the data was released, compared to a 0.6% rise in WTI over the same period, leaving the contract at $2.6672/gal, up 2.3% from the previous close.

Stocks have now tumbled by 17.7 million barrels since the start of the year, the largest drop since 2004, and compared to the five-year average of 2.7 million barrels. The data means that US distillate stocks started March at its second-lowest level since 2004 but above 2022 levels.

The sharp drawdown came as demand rose again, rising above 4 million bpd for the first time since late November and a sharp 16% above year-ago levels.

Exports also picked up, with shipments rebounding back above the 1 million bpd mark, although imports ticked higher as well, leaving the net outflow a touch higher at 860,000 bpd.

Meanwhile, refineries only managed to increase distillate fuel production marginally, with figures higher on the week to 4.3 million bpd as they favoured jet output and even as crude intake comfortably recovered to a two-month high of 15.3 million bpd.

Jet

US jet fuel stocks were mostly static on the week at just over 40 million barrels as the higher output offset an uptick in demand.

Inventories remain near a two-month low, although they are 2.8 million (+8%) above last year's volumes.

Jet production rose by 160,000 bpd on the week to 1.7 million bpd, its highest since the start of the week, while demand gained 35,000 bpd on the week to 1.64 million bpd, its highest since the end of last year.

Finally, exports slowed by 67,000 bpd on the week to 172,000 bpd, its lowest since mid-January.