Huge Decline In US Crude Oil Inventories; Re-Balancing Drops To 41 Weeks -- October 4, 2017

US crude oil inventories: the original estimates were way off (posted last night). The EIA weekly petroleum report (a dynamic link) shows that there was a significant decline in US crude oil inventories: declining by 6.0 million bbls. The number of weeks to "re-balance" decreased from 46 weeks to 41 weeks with that data:

Week	Date	Drawdown	Storage	Weeks to RB
Week 0	Apr 26, 2017		529.0	180
Week 1	May 3, 2017	0.9	528.0	198
Week 2	May 10, 2017	6	522.0	50
Week 3	May 17, 2017	1.8	520.2	59
Week 4	May 24, 2017	4.4	515.8	51
Week 5	May 31, 2017	6.4	509.9	41
Week 6	June 7, 2017	-3.3	513.2	60
Week 7	June 14, 2017	1.7	511.5	57
Week 8	June 21, 2017	2.5	509.0	62
Week 9	June 28, 2017	-0.2	509.2	71
Week 10	July 6, 2017	6.3	502.9	58
Week 11	July 12, 2017	7.6	495.3	47
Week 12	July 19, 2017	4.7	490.6	43
Week 13	July 26, 2017	7.2	483.4	38
Week 14	August 2, 2017	1.5	481.9	47
Week 15	August 9, 2017	6.5	475.4	35
Week 16	August 16, 2017	8.9	466.5	30
Week 17	August 23, 2017	3.3	463.2	29
Week 18	August 30, 2017	5.4	457.8	27
Week 19	September 7, 2017	-4.6	462.4	32
Week 20	September 13, 2017	-5.9	468.2	39
Week 21	September 20, 2017	-4.6	472.8	46
Week 22	September 27, 2017	1.8	471.0	46
Week 23	October 4, 2017	6.0	465.0	41

Other data from the weekly report:

• refineries are still operating well below maximum capacity; currently at 88.1%
• gasoline production virtually unchanged at almost 10 million bbls/day
• again, distillate fuel production increased, average almost 5 million bbls/day
• US crude oil imports were down a bit but more than 10% below last year
• at 465.0 million bbls of crude oil in US inventories, this is in the upper half of the average range
• distillate fuel inventories are in the lower half of the average range despite increased production

More on this, from Reuters:

• US crude stocks (as noted above) "fell sharply, much greater than forecast
• the forecast was for a drawdown of less than a million bbls (756,000 bbls to be exact)
• instead, inventories  fell by 6 million bbls
• and then this: US crude exports rose to almost 2 million bbls / day
• why the world loves WTI: it's $5/bbl cheaper than Brent (yes, I know that pesky little thing called transportation)
• strategists viewed Brent as pricey after a third-quarter rally lifted it to mid-2015 highs by late September. A resumption in output at Libya's Sharara oilfield fed the concerns
• meanwhile, US ouput hit 9.56 million bopd at the end of September, highest since July, 2015; AND, US drillers added six more oil rigs in the week ending September 29

What's all this mean for the recent rally in Brent? At the linked article,

"Fundamentals may not yet be strong enough to support a continued rally, especially in growth-dependent commodities such as oil," Ole Hansen, head of commodity strategy at Denmark's Saxo Bank, said in a quarterly outlook to investors.

Re-read that last line and then look at the charts at this link. I particularly enjoy this one: