Platts staff review of U.S. EIA data
Washington - May 13, 2009
Total U.S. crude oil inventories declined a surprising 4.629 million barrels to 370.629 million barrels last week, while gasoline inventories tumbled 4.151 million barrels, as imports for both commodities took a fall, an analysis of data released by the U.S. Energy Information Administration (EIA) showed Wednesday.
Analysts polled by Platts had been looking for a 1.4 million barrel crude stock build. The EIA's draw followed the American Petroleum Institute's (API) 3.13 million barrel draw reported Tuesday evening.
While U.S. crude inputs fell 330,000 barrels per day (b/d) to 14.424 million b/d, crude imports fell 1.212 million b/d to 8.708 million b/d. Imports declined primarily in PADD V (West Coast), by 844,000 b/d to 919,000 b/d. However, the prior week's 1.763 million b/d import figure was unusually high for the West Coast; imports averaged 1.152 million b/d in April. Meanwhile, inventories of crude oil on the West Coast only fell 800,000 barrels to 60 million barrels, according to the EIA. Crude run through refinery operations were only slightly lower at 2.353 million b/d.
In contrast, PADD III (Gulf Coast) crude stocks fell 2.315 million barrels to 194.52 million barrels, even though imports into the region fell just 271,000 b/d to 5.101 million b/d and refinery runs declined 355,000 b/d to 7.112 million b/d.
It’s possible that the Gulf Coast inventory drawdown was the result of a drop in imports over the past two weeks. On a four-week moving average, Gulf Coast imports at 5.647 million b/d the week ending May 8 were well below the 6.269 million b/d the prior year.
PADD II (Midwest) crude oil inventories fell 1.3 million barrels to 84 million barrels, the EIA data showed, as refinery runs increased and imports edged lower. Stocks fell 993,000 barrels to 28.826 million barrels in Cushing, Oklahoma, home of the New York Mercantile Exchange (NYMEX) crude oil futures contract delivery point, justifying a recent tightening in the crude contango. Contango is the industry vernacular for the condition whereby prices for nearby delivery are lower than prices for future-month delivery.
Meanwhile, inventories of U.S. gasoline stocks fell 4.151 million barrels to 208.291 million barrels for the latest reporting week. Analysts had expected a build of 400,000 barrels, in part because of an increase in the NYMEX RBOB crack spread, which reached $13.24/b last week before retracing to settle at $11.20/b on Tuesday. The crack spread is the difference between the price of the raw crude oil and the price of the products that can be produced from that barrel of crude.
However, U.S. gasoline production fell 208,000 b/d to 8.71 million b/d, while imports declined 76,000 b/d to 747,000 b/d. Gasoline imports have been unusually low for several weeks. The four-week moving average was 882,000 b/d last week, compared to 1.2 million b/d during the same period in 2008.
Imports are primarily sent into PADD I (Atlantic Coast). But regional spot market sources say there has been a lack of incoming cargo, largely due to the strong demand for supply outside the United States, notably from West Africa.
U.S. gasoline stocks are now just 3 million barrels above the five-year average, while Atlantic Coast stocks at 54.477 million barrels are 790,000 barrels below the five-year average. While gasoline inventory levels are not historically low, stocks are certainly much tighter when compared to the surpluses in crude and distillate.
The fact refiners haven't bolstered gasoline production despite an attractive crack spread is not so surprising considering that implied demand remains anemic. Last week’s implied demand was 8.911 million b/d, which compares to a five-year average of 9.328 million b/d.
As for U.S. distillates, inventories climbed 922,000 barrels to 147.455 million barrels in the latest reporting week, which is in line with analyst expectations of a one-million-barrel build. Continued low demand for both heating oil and diesel has distillate stocks some 40.355 million barrels above year-ago levels and 36.8 million barrels above the five-year average.