Analysis of U.S. EIA data: Crude stocks build on low inputs, climb in imports
New York - August 12, 2009
U.S. commercial crude stocks increased 2.519 million barrels to 352.029 million barrels in the week ending August 7, while imports rebounded and inputs fell yet again, an analysis of the oil data from the Energy Information Administration (EIA) showed Wednesday.
At 352.029 million barrels, U.S. commercial crude oil stocks were 36.649 million barrels above the five-year average and 55.482 million barrels greater than year-ago levels.
Crude inventories rose 2.9 million barrels east of the Rockies, with 1.9 million barrels of the overall inventory build occurring on the Atlantic Coast.
At Cushing, Oklahoma, the critical pricing and delivery point for New York Mercantile Exchange (NYMEX) futures contract, crude stocks edged up 281,000 barrels to 33.606 million barrels. The inventory build was tempered by a drop-off in imports in the Midwest. Cushing stocks were 10.606 million barrels more than the five-year average and 14.899 million barrels greater than year-ago levels. Over the past seven weeks, stocks at Cushing have climbed 5.368 million barrels.
Crude imports into the Midwest fell 137,000 barrels per day (b/d) to 1.119 million b/d while imports intothe Gulf Coast jumped 441,000 b/d to 5.732 million b/d. Given the decline in Gulf Coast crude runs, the oil is most likely bound for Cushing via the Seaway Pipeline.
Crude inputs inched down 69,000 b/d to 14.365 million b/d with runs along the Gulf Coast falling 110,000 b/d to 7.026 million b/d.
The drop in refinery inputs caused output to decline in nearly every product except residual fuel oil, a sign that a good deal of coking capacity remains offline. Gasoline output dropped 215,000 b/d to 8.86 million b/d despite relatively healthy profit margins. Production of middle distillates edged up 25,000 b/d to 3.823 million b/d.
The decline in gasoline production and a lower level of imports resulted in a drop in stocks of 927,000 barrels to 211.931 million barrels. The decline in gasoline inventories occurred despite a marked decline in demand. Implied gasoline demand fell 248,000 b/d to 8.951 million b/d week over week and on a four-week moving average. Based on preliminary weekly data, gasoline demand at 9.144 million b/d was 291,000 b/d less than year-ago levels, or down 2.3%. Implied demand is the amount of product that moves through the U.S. distribution system, not actual end consumption.
The drop in implied demand for middle distillates was nearly as precipitous as gasoline, falling 228,000 b/d to 3.198 million b/d week over week. Preliminary data shows implied demand for middle distillates on a four-week moving average, at 3.336 million b/d, is down 20.7% or is 873,000 b/d less than year-ago levels.
An economic recession-led decline in rail and trucking traffic has sorely eroded distillate demand and resulted in a rapid re-build in oil inventories. However, the rate of stock building has slowed over the past month as refiners throttled back production.
Middle distillate stocks increased 786,000 barrels to 162.267 million barrels. Diesel inventories fell 1.087 million barrels to 93.317 million barrels, while heating oil stocks rose 1.71 million barrels to 47.763 million barrels. Total middle distillate stocks were 33.071 million barrels more than the five-year average and 30.68 million barrels greater than year-ago levels, an imposing amount of inventory to work off even if the U.S. was not economically challenged.