The Platts pre-report analyst survey of EIA/API estimates suggests a build of 2.7 million barrels in US oil stocks
Platts Survey of Analysts
- Crude oil stocks up 2.7 million barrels
- Gasoline stocks up 1.4 million barrels
- Distillate stocks down 1.6 million barrels
- Refinery utilization or run rate up 0.3 percentage points to 84.6%
New York, NY - December 9, 2008
Analysts expect a 2.7-million-barrel build in US commercial crude oil stocks when the US Energy Information Administration (EIA) and American Petroleum Institute (API) release weekly data on Wednesday, a Platts survey showed Tuesday. The EIA/API data is scheduled to be published Wednesday at 10:35 a.m. ET/1535 GMT.
The steepening contango at the front of the New York Mercantile Exchange (NYMEX) crude oil curve combined with low refiner demand should reverse last week's 400,000 barrel decline in US commercial inventories. Contango is when nearby prices are lower than later months.
"The price spread between January and February crude oil futures averaged $1.61 per barrel the week ending December 5," said Linda Rafield, Platts senior oil analyst and editor of the weekly Platts Futures and Derivatives Review. "This compares to the previous week's $1.26 per barrel and is more than covering storage costs at Cushing, Oklahoma." Most recent estimates for storing barrels at Cushing are between $0.80 per barrel to $1.10 per barrel. "The wild card remains, as always, imports," Rafield added.
Crude imports dropped a sharp and unexpected 1.455 million barrels per day (b/d) to 9.504 million b/d, with most of the decline reflecting Gulf Coast activity. A decline in crude imports of that magnitude, explained Rafield, would typically be weather-related, although refiners tend to be averse to landing additional volumes at this time of year when tax-related considerations kick in. Also, poor demand in the US products market has curtailed output and curbed refiners appetite for crude barrels.
Analysts polled by Platts project a small increase in refinery utilization for the latest reporting week, up 0.3 percentage points to 84.6%. The prior week's activity showed a refinery utilization drop of 1.9 percentage points to 84.3%, which was believed in part to be related to poor margins or maintenance issues.
Analysts anticipate a build of 1.4 million barrels in gasoline inventories in this week's report, reflecting a weakening economy, which prevents a recovery in demand levels despite the fall in retail prices. "A combination of poor margins for gasoline and weak demand will likely keep production well below 9 million barrels per day," Rafield said. Gasoline output for the week ending November 28 was just 8.716 million b/d.
Consensus estimates point to a decline of 1.6 million barrels in middle distillates inventories, as more seasonal temperatures along the Atlantic Coast cause an uptick in demand levels. Distillate demand dipped 194,000 b/d to just 3.892 million b/d in the previous EIA report; however, the drop was the result of diesel, not heating oil consumption.