EIA ANALYSIS: US supply/demand balances continue to tighten

New York (Platts)--15Nov2006

US supply/demand balances continued to tighten as crude oil inputs fell
back below 15 million b/d and product supplied rebounded, an analysis of the
weekly petroleum data from the Energy Information Administration showed
Wednesday.
Total US oil inventories at 1,052.8 million barrels fell 9 million
barrels week-over-week and in the past month have declined 20 million barrels.
Since the week ending September 29, when product stocks peaked, total refined
product inventories have dropped 43.68 million barrels to 716.78 million
barrels.
A torrid pace of demand growth despite a slowdown in the US economy has
been enabled by the marked fall in retail prices.
While refinery utilization has failed to rebound, total petroleum demand
climbed 241,000 b/d to 21.317 million b/d. Total product supplied has now been
above 21 million b/d for the past five weeks and on a four-week moving
average, demand at 21.345 million b/d was 973,000 b/d above year-ago levels,
or 4.8%.
Demand for both distillate and jet kero climbed significantly
week-over-week. Distillate demand jumped 239,000 b/d to 4.603 million b/d, the
highest level since the week ending December 16, 2005 when heating oil season
is in full throttle. Demand for jet kero surged 298,000 b/d to 1.878 million
b/d. Demand for both distillates and jet kero suggest that cargoes may have
been exported from the Gulf Coast, particularly ultra low sulfur diesel, which
is in short supply in Northwest Europe.
ULSD stocks dropped 1.4 million barrels to 50.4 million barrels while low
sulfur diesel inventories fell 2.4 million barrels to 24.3 million barrels and
accounting for the entire decline in distillates. Total US distillate stocks
at 135 million barrels were 11.6 million barrels above year-ago levels and
11.2 million barrels above the five-year average. However, the week ending
October 6, total US distillate inventories were 24.5 million barrels above the
five-year average.
Gasoline stocks fell 3.7 million barrels to 200.3 million barrels, but
the majority of the decline was blending components since finished gasoline
inventories were down only 700,000 barrels to 110.5 million barrels. Gasoline
inventories at 200.3 million barrels were 52,000 barrels above year-ago levels
and 1.7 million barrels above the five-year average, having also eroded the
surplus against the averages rather substantially in the past six weeks. A
deep maintenance season and the consequent drop in product output amid an
impressive rate of demand growth was behind the erosion in the inventory
overhang in the US.
Crude oil inputs fell 221,000 b/d to 14.932 million b/d and on a
four-week moving average were 15.058 million b/d, or 989,000 b/d above
year-ago levels. However, inputs into refineries last year were still affected
by hurricanes Katrina and Rita, making the comparison rather warped.
--Linda Rafield, linda_rafield@platts.com

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