Oil decidedly undecided

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Today’s EIA report has left oil prices flat-footed, as crude inventories were in line with consensus, while a(nother) gargantuan build to gasoline stocks has not been enough to drag the complex lower (…has only served to keep it in check). Hark! Here are five things to consider in oil and energy markets today:

 

1) While we highlighted on Monday that the U.S. imported over 1.8 million barrels per day from the Arab Gulf last year, and yesterday how the U.S. imported 1.6mn bpd from South America, let’s turn our attention to West Africa.  

Our ClipperData show that flows from West Africa to the U.S. were close to 280,000 bpd last year. Nigeria is the leading source, with volumes predominantly heading to the East Coast. Despite geopolitical tension, the U.S. received nearly 200,000 bpd of Nigerian crude last year, up 15 percent on the year prior.  

Angola is the second leading source, averaging over 70,000 bpd, sending mostly medium and heavy crude (whereas Nigerian sends predominantly light crude). Because of this tilt towards heavier grades, the majority of Angolan crude goes to U.S. Gulf Coast refiners, who are more geared towards refining it. Heavy sweet Dalia crude accounts for over 40 percent of all Angolan crude into the U.S., followed by medium sweet Clov:

US imports of Angolan crude.jpg2) After a counter-seasonal jump higher to start the year, refinery runs have dropped considerably for a second consecutive week, falling in line with the seasonal trend as maintenance gets underway. The majority of the decline in refining activity occurred on the Gulf Coast, with crude inputs dropping 390,000 bpd, but lesser imports meant that stocks for the region only built by 900,000 barrels. 

The majority of this week’s build occurred on the East Coast, boosted by imports. Hark, crude inputs are now just above 16mn bpd, still well above last year’s level (in itself the 5-year high), but is building up a head of steam for a continued move lower:

refinery runs jan 2017.jpg

3) This chart from the FT today highlights the extent of the Gulf Cooperation Council’s (GCC) mission to raise cash amid the oil price crash of recent years. As lower oil prices have dramatically crimped the coffers of the six members of the GCC – Bahrain, Kuwait, Oman, Qatar, Saudi Arabia and U.A.E. – they have raised $66 billion dollars in international bond issuances. Saudi led the charge with a $17.5 bln issuance last year, and is earmarked to issue a further $10 bln as early as March.  

Moody’s estimate the aggregate deficit across the GCC this year is set to be