Oil market on track to rebalance

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    LONDON- US petroleum inventories have continued to converge down towards the five-year average, a sign that oil market rebalancing remains on track, despite the resurgence of the coronavirus since the end of 2020.

    Total stocks of crude oil and products, excluding the strategic petroleum reserve, fell by 12 million barrels last week and are down by 130 million barrels since the middle of 2020.

    Stocks have fallen in 24 out of the last 30 weeks, according to data from the US Energy Information Administration.

    As a result, petroleum inventories are now 6 percent above the pre-pandemic five-year average for 2015-2019, down from a surplus of 14 percent at the end of June.

    The surplus in crude has shrunk to 9 percent from 19 percent, while the surplus in products has narrowed to 5 percent from 12 percent.

    Gasoline stocks are now almost exactly in line with the pre-epidemic five-year average, and while distillates are still in a surplus of 10 percent, that has fallen from almost 30 percent last June.

    Crucially, the volume of distillate supplied to the domestic market, a proxy for consumption, is running above the pre-pandemic five-year average, which is keeping downward pressure on stocks of diesel and heating oil.

    US refineries continue to restrict crude processing, with rates 8 percent below the pre-pandemic average compared to a drop in product consumption of just 4 percent versus the 2015-2019 average.