Platts analysis of U.S. EIA oil stocks data

New York, NY - June 24, 2009

Total U.S. crude oil implied demand, the amount of product that moves through the distribution system, has fallen back below 18 million barrels per day (b/d), according to data just released by the U.S. Energy Information Administration (EIA). An analysis of the data shows this is a second-time occurrence of this pattern in the past month and paves the way for inventory increases.

Total U.S. oil product demand dropped 1.051 million b/d to 17.913 million b/d, with steep declines concentrated in residual fuel oil, propane, propylene and what are classified as "other oils."

On a four-week moving average, total U.S. product demand at 18.320 million b/d was 1.296 million b/d below year-ago levels.

While implied demand for gasoline had shown signs of an uptick over the past month, the trend abruptly ended last week. Implied demand week-on-week for gasoline dropped 225,000 b/d to 9.129 million b/d. On a four-week moving average, gasoline demand at 9.161 million b/d was 0.1 percent above year-ago levels, but was down 0.7 percentage points from EIA's previous report.

Distillate demand was largely unchanged at 3.383 million b/d week-on-week, but on a four-week moving average, distillate demand was still 9.3 percent below year-ago levels.

The downturn in product demand, combined with a jump in refinery output, kept product stocks on an upward trajectory, shifting the surplus evident at the start of the second quarter away from crude.

Gasoline stocks climbed 3.871 million barrels to 208.905 million barrels, which was 103,000 barrels below the five-year average, but 148,000 barrels above year-ago levels. Stocks of middle distillate rose 2.077 million barrels to 152.103 million barrels, which was 34.16 million barrels above the five-year average and 32.682 million barrels above year-ago levels.

Total U.S. oil product inventories increased 9.2 million barrels to 750.7 million barrels, putting them 74.262 million barrels above the five-year average and 77.7 million barrels above year-ago levels.

Although product inventories continued a relentless build as demand showed no signs of a pick-up, crude stocks eroded further -- falling 3.868 million barrels to 353.853 million barrels. While U.S. commercial crude stocks retained a surplus against the five-year average of 27.909 million barrels, that was 22 million barrels lower than eight weeks ago.

While the headline crude number may have been a bullish catalyst for futures markets, 2.2 million barrels of the stocks decline occurred on the largely disconnected West Coast. The crude stocks draw was the result of a 354,000 b/d jump in refinery inputs to 15.031 million b/d, which outweighed the increase in imports of 247,000 b/d to 9.284 million b/d. That crude inputs into refineries jumped more than gross inputs will increase production of heavier products such as residual fuel oil. Gross inputs include feedstocks that are typically lighter than the crude oil inputs.