North America Crude Markets short-term outlook: February 2023

US commercial crude inventories skyrocketed in January. Severe winter weather shuttered refinery units throughout PADD II and PADD III, hampering refinery demand, while winter fog also suppressed USGC exports. Additionally, the short-term WTI forward curve slipped into the widest contango structure since 2020, incentivizing storage plays in Cushing. The upcoming refinery turnaround season is expected to be heavier than previous years as refiners catch up on deferred maintenance projects. Planned and unplanned refinery outages are expected to continue to hamper crude runs in the US in coming months despite commissioning activities ramping on the largest refinery expansion in the US in some decades. In this report, we dive into the recent factors driving US inventory builds and emergent contango term structure for WTI.