Platts analysis of U.S. EIA oil stocks data: U.S. oil demand hits seven-and-half-year low

Washington - May 6, 2009

Total U.S. oil demand dropped 410,000 barrels per day (b/d) week-over-week to 18.019 million b/d in the week ended May 1, the lowest level since the week ending September 21, 2001, an analysis of the weekly petroleum data from the Energy Information Administration (EIA) showed Wednesday.

Every product category showed a contraction on the year-earlier week, according to EIA.

On a four-week moving average, total U.S. oil demand at 18.212 million b/d was down 1.556 million b/d year-over-year, or 7.9% below year-ago levels.

Double-digit percentage losses were seen in every product category except gasoline. Implied gasoline demand on a four-week moving average was 9.039 million b/d, or down 0.9%. That's a decline of 0.4 percentage points from the previous EIA report. Implied demand is the amount of product that moves through the US distribution system, not actual end consumption.

Implied demand for middle distillates continued to deteriorate, reflecting both the general malaise that currently grips the U.S. and global economies as well as the fact that historically, this is the lowest demand period of the calendar year.

Demand for middle distillates, at 3.527 million b/d, was down 14.1% year-over-year, marking a decrease of 3.6 percentage points from the prior week's report.

Poor demand fed into a higher-than-expected 2.428-million-barrel build in distillate stocks. At 146.5 million barrels, middle distillate inventories were 36.456 million barrels greater than the five-year average and 40.809 million barrels more than year-ago levels. The build in middle distillates was across the board with stocks rising in diesel, ultra-low sulfur diesel and heating oil.

Despite a low level of imports and still mediocre refinery output, total U.S. product stocks increased 7.3 million barrels to 712 million barrels. At 712 million barrels, total U.S. product stocks were 64.5 million barrels higher than the five-year average and 64.4 million barrels more than year-ago levels. The surpluses to historical averages are no longer concentrated in crude oil inventories.

Even though crude inputs into refineries climbed 420,000 b/d to 14.754 million b/d, an uptick in imports allowed inventories to build, albeit smaller-than-expected. Stocks rose 605,000 barrels to 375.258 million barrels, leaving inventories 46.585 million barrels more than the five-year average and 49.675 million barrels in excess of year-ago levels. While commercial crude stocks increased at a smaller-than-expected level, another 2 million barrels were put into the Strategic Petroleum Reserve, the U.S. government's safety-net of oil supply. Crude imports edged up 96,000 b/d to 9.92 million b/d, a fairly high level given that crude runs were still substantially below 15 million b/d.