Incremental refinery runs lagged demand growth in the second quarter, which implies big draws and tighter markets headed toward rebalancing. Observed commercial stocks tell a different story; draws so far this year are minimal and July was another month of builds, led by contraseasonal increases in refined product stocks. Global tanks may not have accumulated as much volume this year as last July, but are still growing, in stark contrast to the current consensus. The stockbuilds are most visible in closely watched OECD commercial barrels, which reached 3.1 billion barrels in storage for the first time. Several ongoing issues appear to be in play: the return of crude builds, albeit smaller than in the past when the crude surplus was larger; minimal drawdowns in gasoline over what should be peak summer consumption months; big leaps in US propane stocks; and diesel stocks way up on the year. While middle distillate stocks may be worked down if the northern hemisphere gets a more normal winter, overhangs in gasoline, propane and other lighter products could get worse.
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