Platts analysis of U.S. EIA oil stocks data: U.S. distillate stocks draw as demand climbs
New York, NY - April 8, 2009
Middle distillate stocks dropped a larger-than-expected 3.354 million barrels last week, with declines occurring in both diesel and heating oil inventories as demand accelerated, an analysis of the weekly oil data from the U.S. Energy Information Administration (EIA) showed Wednesday.
Analysts polled by Platts had projected a decline of just 600,000 barrels; the larger-than-expected drop in middle distillate stocks caused a price spike in heating oil futures on the New York Mercantile Exchange (NYMEX).
Still, at 140.799 million barrels, distillate stocks were 30.66 million barrels greater than the five-year average and 34.772 million barrels more than year-ago levels. Seasonally, middle distillates inventories decline during the first week in April.
Diesel stocks decreased 2.8 million barrels to 83.5 million barrels, while heating oil inventories fell 1.1 million barrels to 37 million barrels. The decline in diesel stocks occurred in almost every U.S. region, suggesting the decline was not caused solely by winter fuel needs along the Atlantic Coast or planting season in the Midwest.
Week over week, distillate demand climbed 412,000 barrels per day (b/d) to 4.065 million b/d. This is the first time implied demand has jumped back over 4 million b/d since the week ended February 13. Implied demand is the amount of product that moves through the U.S. distribution system, not actual end consumption. On a four-week moving average, distillate demand of 3.842 million b/d was still down 7.2% year-over-year, even though it was a pick-up of 1.9 percentage points since the previous report.
This is an indication that either stocks at the tertiary level have been depleted, or it is a sign the U.S. economy was bottoming out.
Total U.S. oil demand also picked up, climbing 276,000 b/d to 18.867 million b/d. The acceleration was concentrated in middle distillates and "other oils," and provided another nugget for the bulls on the NYMEX.
While the headline distillate number was bullish on the surface, the crude data continued to suggest that rallies would be hard won.
U.S. commercial crude stocks rose 1.645 million barrels to 361.072 million barrels, which is 30.66 million barrels greater than the five-year average and 34.772 million barrels more than year-ago levels. The stock build kept U.S. crude inventories at nearly a 16-year high. Meanwhile, another 1.9 million barrels of crude were delivered into the U.S. government's Strategic Petroleum Reserve (SPR), the nation's social safety net of oil supply.
While the headline crude oil number looked a bit bearish for prices, there was a decline in inventories at the NYMEX futures contract delivery point in Cushing, Oklahoma for the fourth consecutive week. Stocks at Cushing declined 878,000 barrels to 29.975 million barrels.
A build of 656,000 barrels in gasoline stocks, which was contrary to pre-report analyst expectations of a 1.5-million-barrel draw, also failed to send prices lower. The build in gasoline stocks was most notable in the Midwest, where inventories climbed 1.4 million barrels to 53.3 million barrels. Stocks along the Atlantic Coast -- home of the NYMEX delivery point in New York Harbor -- fell 1.9 million barrels to 56.2 million barrels, potentially reflecting ongoing issues at the refinery of ConocoPhillips in Linden, New Jersey, which handles 238,000 b/d.
The gasoline demand deterioration seen over the past four weeks appears to have leveled out, with implied demand on a four-week moving average at 9.051 million b/d, down 0.2% year-on-year and unchanged from last week's EIA report.