DOE ANALYSIS: High crude, product imports meet soaring demand

New York (Platts)--14Dec2005

An influx of Canadian crude imports into the Midwest caused stocks at
Cushing, Oklahoma, home of the New York Mercantile Exchange's delivery point,
to swell to their highest level since last May, an analysis of the weekly
petroleum inventory data showed Wednesday. 

     The soaring imports were a badly needed offset to falling refining yields
and lower output as product demand soared. 

     Barrels of Western Canadian Select, a blend of 19 grades of crude
produced in Alberta, flooded PADD II (Midwest), an unusual occurrence at this
time of year as Canadian exports tend to fall during the winter. Imports into
PADD II edged up 62,000 b/d to 1.041-mil b/d while imports into the Gulf and
West coasts dropped. The jump in imports into PADD II resulted in a
3.7-mil bbl jump in stocks to 21.4-mil bbl. 

      Product imports also climbed, resulting in a 1.8-mil bbl build in
gasoline stocks and preventing a larger draw in distillate inventories.
Distillate inventories fell 100,000 bbl, to 130.5-mil bbl, as abnormally cold
temperatures covered the Midwest and Atlantic coasts. Distillate imports rose
24,000 b/d to 425,000 b/d and were 111,250 b/d above year-ago levels on a
four-week moving average. Gasoline imports surged 307,000 b/d to 1.256-mil b/d
and were 90,000 b/d above year-ago levels on a four-week moving average.      

     Production of jet kero, gasoline and distillate declined last week as
crude inputs inched down 188,000 b/d to 15.22-mil b/d and total refining
yields slipped to 96.2%, the lowest level since mid-September while total
product demand rocketed to 21.642-mil b/d, the highest ever.

     Demand for residual fuel oil and propane accounted for the majority of
the jump in demand, no surprise given historically high natural gas prices.
Both residual fuel oil and propane demand rose 335,000 b/d each, leaving
deliveries for resid at 1.233-mil b/d, or the highest in nearly two years, and
propane was 1.598-mil b/d. Record demand should be seen by the market as
supportive despite the builds in crude and gasoline.

		--Linda Rafield; linda_rafield@platts.com

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