Analysis of U.S. EIA data: Crude imports rebound, stocks remain static

New York - August 26, 2009

U.S. crude stocks inched up 128,000 barrels to 343.76 million barrels the week ending August 21 as imports rebounded sharply from an abnormally low level the prior week, an analysis of the oil data from the Energy Information Administration (EIA) showed Wednesday.

At 343.760 million barrels, total commercial crude stocks were 27.609 million barrels above the five-year average and 38 million barrels above year-ago levels.

U.S. crude imports jumped 1.112 million b/d to 9.225 million barrels per day (b/d), a not particularly high level for August. And the increase in imports was across the board.

Crude imports in PADD II (Midwest) were up 308,000 b/d to 1.41 million b/d. Yet, inventories in that region dropped 2.708 million barrels to 83.071 million barrels. Stocks at Cushing, Oklahoma -- home of the New York Mercantile Exchange (NYMEX) delivery point -- fell 1.463 million barrels to 31.081 million barrels. Stocks at Cushing were still holding a solid surplus against the averages, 9.627 million barrels above the five-year average and 13.795 million barrels above year-ago levels. While crude imports climbed in PADD II, inputs to refineries increased 96,000 b/d to 3.205 million b/d.

Crude imports into PADD III (Gulf Coast) climbed 678,000 b/d to 5.125 million b/d, possibly reflecting floating storage that was offloaded as the contango* in the front of the NYMEX crude curve strengthened by $1.69/b last week. Those sitting with floating storage would have had the incentive to bring the oil on land and lock in profits against the board.

Crude stocks in PADD III increased 1.018 million barrels to 176.797 million barrels. Crude imports in PADD V (West Coast) also rose, climbing 128,000 b/d to 1.009 million b/d, and crude stocks in PADD V increased 1.913 million barrels to 53.922 million barrels.

Crude inputs dipped 21,000 b/d to 14.483 million b/d, while total throughputs edged up 17,000 b/d to 14.861 million b/d, allowing refiners to increase output of lighter end products.

While the increase in total throughputs resulted in a 120,000 b/d jump in gasoline production, which was expected given improved margins, stocks fell another 1.7 million barrels to 208.054 million barrels. Total gasoline stocks have declined a cumulative 7.337 million barrels over the past five weeks, in line with seasonal tendencies. Implied demand** for gasoline, however, fell 100,000 b/d to 9.105 million b/d week-over-week, a not terribly impressive number for mid-August. Typically, gasoline demand peaks in mid-August, tapers off after Labor Day weekend and takes a steep fall throughout September.

Refiners also took advantage of improved margins for distillates by increasing output 196,000 b/d to 4.001 million b/d. Stocks of both diesel and heating oil increased, stretching the surpluses against the averages further. At 162.384 million barrels, middle distillate stocks were 30.55 million barrels above the five-year average and 30.259 million barrels above year-ago levels. Like gasoline, implied demand for middle distillates dipped 54,000 b/d to 3.412 million b/d.

Any improvement in total petroleum demand was concentrated in the "other oils" category, which is feedstock. The headline categories – demand for gasoline, middle distillates, jet and residual fuel oil – on a four-week moving average remain down year-over-year.

* Contango is the condition whereby prices for nearby delivery are lower than prices for future-month delivery.
** Implied demand is the amount of product that moves through the U.S. distribution system, not actual end consumption.