Global Oil Inventories Decline WoW, U.S. Crude Builds but Product Stocks Draw
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Global Oil Inventories Decline WoW, U.S. Crude Builds but Product Stocks Draw
Morgan Stanley compiles weekly data from the EIA, ARA, Japan, Singapore and Fujairah, showing that total oil inventories fell by 11.2 million barrels last week, with product draws more pronounced.
- Total oil inventories fell by 11.2 million barrels last week, including a 3.5 million barrel decline in crude inventories and a 7.7 million barrel decline in refined product inventories.
- U.S. commercial crude inventories rose by 3.1 million barrels, but after SPR inventories fell by 1.7 million barrels, net crude inventories increased by about 1.3 million barrels.
- U.S. gasoline inventories fell by 1.6 million barrels and distillate inventories by 3.1 million barrels, as strong refined product exports and lower refinery output jointly drove the draws.
- U.S. refinery throughput fell by 130,000 barrels per day week on week, while refinery utilization edged down to 92.0%.
Report interpretation
Overview
This report is Morgan Stanley's weekly petroleum inventory summary, covering weekly oil inventory data from the U.S. EIA, ARA, Japan PAJ, Singapore IE and Fujairah. The report focuses on changes in crude, refined products, gasoline, distillates, SPR, refinery runs, imports and exports, and major storage hubs.
Core views
The core conclusion is that global oil inventories fell markedly last week, with draws in refined products especially pronounced. However, the build in U.S. commercial crude inventories and the slight easing in refinery utilization weakened the one-sided bullish signal from the inventory decline. U.S. gasoline inventories remain above the five-year range, and distillate inventories are roughly around the five-year average, indicating that while product inventories are falling, overall supply-demand conditions are not broadly tight.
Analysis framework
The report uses a weekly inventory monitoring framework, comparing U.S. EIA data with regional hub data from ARA, Japan, Singapore and Fujairah, and breaking down indicators such as crude, SPR, refinery runs, gasoline, distillates and refined product exports to assess the supply-demand drivers behind inventory changes.
Methodology notes
Assess short-term supply-demand balance through weekly changes in crude and refined product inventories.
Inventory declines usually indicate demand stronger than supply or lower output, while inventory builds usually indicate looser supply or weaker demand; however, SPR, refinery runs, imports and exports, and regional distribution must also be considered.
Aggregate weekly oil inventory data from the United States, ARA, Japan, Singapore and Fujairah.
Multi-region inventories can reduce the distortion from a single-region shock and help reveal the global direction of oil inventories.
Asset mapping & comparison
Structured mapping from thesis to named assets (strengths, weaknesses, peers, risks).
- crude oildirectly related
- Strengths
- Global crude inventories declined, and draws in Japan and Northwestern Europe provided marginal support for prices.
- Weaknesses
- The build in U.S. commercial crude inventories weakened the overall draw signal.
- Comparison
- Compared with refined products, the crude-side signal is more mixed.
- Risks
- If U.S. commercial crude inventories continue to build, upside in oil prices could be constrained.
- refined productsdirectly related
- Strengths
- Both gasoline and distillates drew down, and strong refined product exports together with lower refinery output supported the draws.
- Weaknesses
- U.S. gasoline inventories remain above the five-year range, so absolute inventory levels are still healthy.
- Comparison
- The refined product side is more bullish than the crude side.
- Risks
- If refinery output recovers or exports slow, the pace of inventory draws could ease.
- energy stocksindirectly related
- Strengths
- Inventory declines and product draws are generally supportive of energy prices and sector sentiment.
- Weaknesses
- The report does not provide single-stock ratings, earnings forecasts, or target prices.
- Comparison
- The impact on energy stocks should be assessed together with oil prices, refining spreads and company exposure.
- Risks
- Inventory data are short-cycle indicators and cannot substitute for company fundamental research on their own.
Key data
- Change in total oil inventories-11.2 million barrelsThe report chart caption shows that total oil inventories fell by 11.2 million barrels last week.
- Change in crude inventories-3.5 million barrelsThe crude inventory draw was mainly driven by draws in Japan and Northwestern Europe.
- Change in refined product inventories-7.7 million barrelsThe product inventory draw was mainly driven by declines in the United States and Asia.
- U.S. commercial crude inventories+3.1 million barrelsU.S. commercial crude inventories increased last week.
- U.S. SPR inventories-1.7 million barrelsSPR inventories continued to decline due to IEA-coordinated releases.
- U.S. net crude inventories+1.3 million barrelsAfter offsetting the SPR decline, the build in commercial crude left net crude inventories up by about 1.3 million barrels.
- U.S. crude production13.7 million barrels/dayU.S. crude production was flat week on week.
- U.S. refinery utilization92.0%Refinery utilization fell by 0.1 percentage point week on week.
- U.S. gasoline inventories-1.6 million barrelsGasoline inventories fell, but remain above the five-year range.
- U.S. distillate inventories-3.1 million barrelsDistillate inventories fell and are currently roughly in line with the five-year average.
Impact & implications
The inventory data are mildly bullish to neutral for oil prices: declines in global total inventories and refined product inventories indicate a modest tightening in short-term supply-demand balance; however, the build in U.S. commercial crude inventories, the decline in refinery throughput, and the still-elevated gasoline inventories mean the bullish signal is not one-directional. Investors should focus on whether refined product draws continue over the next few weeks and whether refinery utilization and export strength can be sustained.
Risks
- The report is primarily a weekly inventory summary, so short-term fluctuations may be affected by seasonality, shipping schedules, refinery maintenance and statistical methodology.
- The direction of the build in U.S. commercial crude inventories is not fully aligned with the draw in global total inventories, which may lead to divergent market interpretations.
- Gasoline inventories remain above the five-year range, indicating that the U.S. gasoline market has not yet shown clear tightness.
- The report contains Morgan Stanley research conflicts of interest and regulatory disclosures, and investors should not rely on it as the sole basis for investment decisions.
What to watch
- Whether U.S. commercial crude inventories continue to build, especially changes in Cushing inventories.
- Whether the impact of SPR releases on net inventory definitions continues.
- Whether U.S. refinery utilization can hold near 92% or move higher again.
- Whether product export strength continues to support draws in gasoline and distillates.
- Whether inventories in ARA, Japan, Singapore and Fujairah continue to trend lower.