Risk appetite improved as 6 central banks jointly issued a statement pledging to enhance liquidity support to the global financial system. The FED, ECB, BOE, BOJ, BOC and SNB agreed to cut, effective from December 5, 2011 to February 1, 2013, the price on the existing temporary USD liquidity swap arrangements by -50 bps, to the USD OIS+50 bps. As indicated in the statement, the aim of these actions is' to ease strains in financial markets and thereby mitigate the effects of such strains on the supply of credit to households and businesses and so help foster economic activity' while the FED affirmed that 'US financial institutions currently do not face difficulty obtaining liquidity in short-term funding markets'.

Separately, the People's Bank of China cut the reserve requirement ratio (RRR) for all depository financial institutions by -50 bps, effective December 5, 2011 as reduction in inflationary pressure has lowered the need for tightening monetary policy. Meanwhile, the slowdown in economic growth has increased the need for stimulus. The official Chinese PMI data fell to 49.0 in November (consensus: 49.8) from 50.4 in October. The reading of a similar gauge compiled by HSBC was revised lower to 47.7 for November from the flash reading of 48.0. In Ocotber, the index was 51.

The DOE/EIA reported that total crude oil and petroleum products stocks climbed +7.66 mmb to 1044.46 mmb in the week ended November 25. Crude stockpile rose +3.93 mmb to 334.75 mmb as stocks increased in 3 out of 5 PADDs. Cushing stock, however, fell -0.72 mmb to 31.30 mmb. Utilization rate increased -0.9% to 84.6%.

Gasoline inventory added +0.21 mmb to 209.87 mmb although demand increased +0.72% to 8.66 M bpd, production and imports slipped -2.98% -35.25% respectively. Distillate inventory soared +5.53 mmb to 138.49 mmb as demand plunged -6.68% to 3.97M bpd. Imports jumped +11.11% while production added +1.15% during the week.

Weekly change in inventory as of 25/11/11 ActualChangeConsensusPrevious
Crude oil 334.75mmb+3.93 mmb+0.50 mmb-6.22 mmb
Gasoline 209.87 mmb+0.21 mmb+1.00 mmb+4.48 mmb
Distillate 138.49 mmb+5.53 mmb-2.20 mmb-0.77 mmb

Comparison between API and EIA reports:

       

  API (Nov 25)   EIA (Nov 25) 
 ActualInventoryPrevious Forecast (using API's inventory level)Inventory
Crude oil+3.44 mmb339.17 mmb-5.57 mmb +8.36mmb339mmb
Gasoline-0.17 mmb209.39 mmb+5.42 mmb -0.24 mmb209 mmb
Distillate+1.35 mmb139.47 mmb-0.89 mmb +6.50 mmb139 mmb

       

API collects stockpile information on a voluntary basis from operators of refineries. Data from the API and DOE have moved in the same direction 71% of the time over the past 52 weeks

Source: Bloomberg, API, EIA

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