(John Kemp is a Reuters market analyst. The views expressed are
* Chart 1: tmsnrt.rs/2r39psy
* Chart 2: tmsnrt.rs/2q62TDS
* Chart 3: tmsnrt.rs/2q6g1Zv
* Chart 4: tmsnrt.rs/2pClGDT
* Chart 5: tmsnrt.rs/2pnjXXb
* Chart 6: tmsnrt.rs/2q6dLSh
By John Kemp
LONDON, May 11 U.S. crude stocks have shown a
sustained decline over the last five weeks, giving oil bulls new
inspiration that the market is rebalancing.
Commercial crude inventories have fallen by 13 million
barrels since the end of March, according to data from the U.S.
Energy Information Administration (tmsnrt.rs/2r39psy).
Crude stocks generally follow an annual cycle driven by
seasonal variations in fuel consumption and the maintenance
schedule for U.S. refineries.
Stocks typically rise during the first four months of the
year, reaching an annual peak in early May, before falling
steadily through the middle of September.
During the decade between 2007 and 2016, crude stocks
increased by an average of 45 million barrels between the start
of the year and the annual peak on or about May 5 (tmsnrt.rs/2q62TDS).
In 2017, crude stocks started increasing much faster than
usual, rising by 56 million barrels between the start of January
and the end of March (tmsnrt.rs/2q6g1Zv).
Since then, however, stocks have fallen every week, a much
earlier start to the draw down season than normal.
At the end of March, crude stocks were 35 million barrels
higher than at the corresponding point in 2016 and 196 million
barrels over the 10-year average.
By May 5, stocks had fallen to just 13 million barrels over
the prior year and 168 million barrels over the 10-year average
Commercial stocks have drawn down, despite sales from the
government’s strategic petroleum reserves during the period.
The drawdown has been the result of slightly slower crude
imports and a record rate of refinery crude processing (tmsnrt.rs/2pnjXXb).
Processing peaked at 17.3 million barrels per day (bpd) in
the middle of April when it was almost 1.4 million bpd higher
than in 2016 and 2.4 million bpd higher than the 10-year
But such rapid rates of processing are unlikely to be
sustainable and refiners have already begun to scale back crude
Record run rates have left gasoline stocks at similar levels
to 2016 when excessive inventories prompted refiners to ease
back processing rates over the summer to return stocks to more
normal levels (tmsnrt.rs/2q6dLSh).
So the critical question is whether the big crude stock
draws will continue if refinery processing returns to a more
(Editing by Alexander Smith)