Analysis of US EIA data: Cushing crude oil stocks flirt with all-time highs
New York - August 4, 2010
The U.S. Energy Information Administration (EIA) Wednesday reported a 666,000-barrel build in crude oil stocks at Cushing, Oklahoma, home of the New York Mercantile Exchange (NYMEX) futures contracts delivery point, for the week ending July 30. This build left Cushing stocks just 109,000 barrels below the all-time high of 37.945 million barrels, an analysis of the data showed. This analysis and commentary is provided by Linda Rafield, Platts senior oil analyst and editor of the weekly Futures and Derivatives Review, a supplement to Platts Oilgram Price Report.
At 37.836 million barrels, Cushing stocks were 10.817 million barrels above the five-year average and 5.715 million barrels above year-ago levels.
The American Petroleum Institute (API), in its weekly release of data Tuesday, also showed a 666,000-barrel build at Cushing.
Given tightness in the front spread over the past two months and with September/October prices settling Tuesday at minus 44 cents, one suspects the storage space at Cushing was contracted when rates were more attractive.
While stocks at the delivery point edged towards record levels, U.S. crude levels dropped 2.784 million barrels to 357.98 million barrels, 29.928 million barrels above the five-year average and 8.47 million barrels above year-ago levels.
Both an increase in crude inputs and a steep drop-off in imports fed into the overall stock-decline.
Crude imports fell a whopping 1.524 million barrels per day (b/d) to 9.596 million b/d as the backlog of barrels caused by weather disturbances in the Gulf of Mexico cleared. Imports along the Gulf Coast decreased 1.64 million b/d to 5.572 million b/d. With the exception of the West Coast, crude imports into every region declined the week ending July 30.
While imports took a nosedive, inputs to refineries climbed 113,000 b/d to 15.575 million b/d with the Gulf Coast accounting for 89,000 b/d of the increase. Gross inputs breached the 16-million-b/d level for the second time in three weeks, a rate not-uncommon for refinery runs during peak driving season when demand is at somewhat more robust levels.
U.S. oil demand declined 498,000 b/d to 19.324 million b/d with demand for every product pulling back, with the exception of residual fuel oil.
Implied demand* for middle distillates fell 135,000 b/d to 3.464 million b/d and contributing to a 2.173-million-barrel build in inventories. At 169.686 million barrels, stocks of middle distillates were 33.278 million barrels above the five-year average and 8.205 million barrels above year-ago levels, a daunting inventory overhang that would require an abnormally cold winter to start to burn off stocks.
Stocks of ultra-low sulfur diesel rose 1.77 million barrels to 108.377 million barrels while inventories of heating oil increased 950,000 barrels to 50.08 million barrels.
Gasoline demand also ebbed, falling 155,000 b/d to 9.477 million b/d, a still respectable level, and contributing to an inventory build of 729,000 barrels. Gasoline demand tends to swing back to the upside in August.
At 222.974 million barrels, gasoline stocks were 15.808 million barrels above the five-year average and 10.116 million barrels above year-ago levels, plush levels with essentially one month left to driving season.
Total product stock increased 8.886 million barrels to 766.934 million barrels, reflecting the tepid level of demand and a jump in imports. U.S. product stocks were 50.354 million barrels above the five-year average and just 3.966 million barrels below year-ago levels.
*Implied demand is the amount of product that moves through the U.S. distribution system, not actual end consumption.
*Editor’s Note: Linda Rafield’s commentary is based on her knowledge of market trends, information from industry sources, and her own views as a long-time energy analyst. Please contact Kathleen Tanzy if you require any additional information or would like to interview Linda Rafield.
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