MOSCOW (MRC) -- U.S. stocks of road diesel and heating oil show early signs of stabilizing and even increasing slightly as exceptionally high prices encourage production, discourage exports and possibly suppress consumption, said Reuters.
Distillate fuel oil inventories increased by 3 MM barrels in the six weeks between Oct. 7 and Nov. 18, according to the U.S. Energy Information Administration (EIA).
The increase was small but runs against the normal trend for a drawdown at this time of year and indicates high prices and a slowing economy are starting to rebuild inventories.
In the ten years before the pandemic, distillate inventories declined by an average of more than 11 MM barrels over the same period.
Between 2010 and 2019, seasonal drawdowns ranged from ranged from as little as 7 MM barrels to as much as 21 MM barrels.
Distillate inventories have not increased at this time of year since 2008, when the financial crisis was pushing the economy further into recession.
We remind, China's refined oil product exports in November are set to hit the highest since April 2020 as refiners ramp up output to multi-month highs to boost diesel supply and profit, offsetting the impact of slower domestic demand from COVID-19 restrictions. The world's top two refiners - the United States and China - are processing more crude to meet higher diesel use globally this winter as countries switch to oil for heating, away from more expensive natural gas. The increased output could also cool prices for other oil products, especially for gasoline, and dampen overall refining margins.