Analysis of U.S. EIA data: A draw down in U.S. crude oil inventories continued last week

New York - September 16, 2009

A draw down in U.S. crude oil inventories continued last week, while the surplus in distillate stocks expanded, putting pressure on the New York Mercantile Exchange heating oil crack spread, according to an analysis of U.S. Energy Information Administration (EIA) data just released. The crack spread is the difference between the cost of the raw barrel of crude and the cost of refined products the barrel can produce.

U.S. crude stocks fell 4.7 million barrels to 332.8 million barrels the week ending September 11, the EIA reported today. Crude inventories have fallen steadily for weeks, from 352.029 million barrels the week ending August 7.

While crude inputs have been low as a result of sluggish refinery demand, that sluggish demand has taken a toll on U.S. imports. Crude imports the week ending September 11 fell 192,000 barrels per day (b/d) to 8.903 million b/d. That compares to a five-year average of 9.59 million b/d.

U.S. crude inventories are still above year-ago levels and the five-year average, but that surplus has declined since early August. Inventories for the latest reporting week were 41.05 million barrels greater than year-ago levels and up from 39.45 million barrels the week ending September 4. But that's down from a 55.48 million barrel surplus the week ending August 7.

In contrast, U.S. distillate inventories continue to mount, reflecting low demand as a result of a sluggish economy. Distillate inventories climbed 2.2 million barrels to 167.8 million barrels the week ending September 11, according to the EIA. That put stocks 38.17 million barrels ahead of year-ago levels and up from a surplus of 29.55 million barrels the week ending August 14.

At 23.07 million barrels, the year-on-year U.S. gasoline surplus for the week ending September 11 is not as steep as the distillate surplus. But the year-on-year gasoline surplus has grown quickly from a 484,000 barrel deficit the week ending July 24. With summer driving season now past, demand is no longer expected to be on the rise.

For more information on crude oil, visit the Platts website.