Stocks dynamics remains mysterious

Global crude stocks are the subject of interest for many market participants lately. Sattelite imagery providers are reporting steep draws since November, especially Kayrros. On the other side, more conventional surveying techniques such as the API survey reports stock builds in the US (0.6 mb last week for crude). The IEA also released their monthly oil report yesterday with the view that Q4 21/Q1 22 stock draws should ease, as OPEC production ramps up. With such diverging trends, time spreads remain supported, with US WTI time spreads departing from other markets and rallying even further. Dubai and Brent time spreads remained range-bound, close to 100 c$/b at the front, which would imply that stock draws may continue.

Source: Kayrros, onshore inventories

Looking at the API data release, crude stocks may have expanded by 0.6 mb, while gasoline stocks dipped by another 2.8 mb and distillates stocks remained broadly flat. This suggests that US refining continued to run at lower-than-expected levels, leaving the two fuel markets undersupplied. Both RBOB and Heating oil cracks rallied following the news, as East coast stocks were unlikely to be rescued by refined product imports from Europe due to the closed arbitrage.