Analysis of U.S. EIA data
New York - February 24, 2010
U.S. crude oil inventories rose 3.034 million barrels to 337.537 million barrels the week ending February 19, as a rise in crude imports outweighed an increase in refinery runs, data released by the U.S. Energy Information Administration (EIA) showed Wednesday.
U.S. crude inputs rose 335,000 barrels per day (b/d) to 14.107 million b/d, the third consecutive increase. Refinery runs, which had been languishing below prior year levels and the five-year average since the second week of October, were slightly above the prior year's 13.936 million b/d figure.
The gap below the five-year average has also improved, with runs running at a 393,400 b/d deficit the week ending February 19, compared to a 1.249 million b/d deficit the week ending January 29.
This is a bullish consideration for crude, although the bears can point to high crude imports. U.S. crude imports climbed 536,000 b/d to 9.084 million b/d, the EIA data showed, compared to 8.769 million b/d the same week in 2009.
Independent analyst Jim Ritterbusch has attributed a recent rise in U.S. imports to the offloading of floating storage, the result a narrowing New York Mercantile Exchange (NYMEX) light sweet crude contango*. The tighter contango also explains a recent decline in inventories at Cushing, Oklahoma—home of the NYMEX crude oil futures contract delivery point. Cushing stocks fell 710,000 barrels to 29.902 million barrels the week ending February 19. That's down from 35.67 million barrels the week ending January 1.
The April/May NYMEX crude spread settled at minus 43 cents per barrel (/b) Tuesday, widening from minus 39 cents/b on Friday, but still tighter than the minus 62 cents/b seen on February 2.
The largest crude inventory build last week was seen in the U.S. Gulf Coast, which should come as no surprise considering the steady imports coming into the region. Gulf Coast (PADD III) inventories were up 2.169 million barrels to 180.07 million barrels, the EIA data showed, putting inventories 8.075 million barrels above the five-year average. Gulf Coast stocks were at a 4.268 million barrel deficit to the five-year average the week ending December 25, but have been steadily rising ever since.
West Coast (PADD V) crude inventories jumped 2.158 million barrels to 48.897 million barrels.
Inventories fell in the Atlantic Coast, Midwest and Rockies regions.
Despite last week's increase in crude runs, product inventories fell, the EIA data showed. U.S. gasoline inventories fell 895,000 barrels to 231.17 million barrels, exceeding analyst expectations of a 200,000 barrel draw.
U.S. gasoline imports rose to 846,000 b/d from 709,000 b/d, although they remained below the five-year average of 1.015 million b/d. Gasoline production jumped 435,000 b/d to 8.863 million b/d. But demand soared 543,000 b/d to 9.064 million b/d, leading to the inventory draw.
An improvement in gasoline demand was to be expected following two weeks of depressed figures as snowy weather across the mid-Atlantic kept many drivers off the road.
But last week's increase put demand slightly above last year's 9.01 million b/d figure, and the 9.039 million b/d five-year average, providing some ammunition for the NYMEX RBOB bulls. Whether or not that weekly number can be sustained is another question.
U.S. distillate inventories fell 591,000 barrels to 152.664 million barrels, despite a rise in imports and production, and a fall in demand. Distillate imports were up 53,000 b/d at 444,000 b/d, while production climbed 158,000 b/d to 3.591 million b/d. Distillate demand fell 125,000 b/d to 3.662 million b/d, remaining well below the five-year average of 4.29 million b/d.
Atlantic Coast (PADD I) heating oil inventories climbed 302,000 barrels to 34.146 million barrels, likely as demand in the region slipped following the winter storms.
*Contango is the industry vernacular for the condition whereby prices for nearby delivery are lower than prices for future-month delivery.
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