New York (Platts)--13Nov2008

Total US petroleum demand has steadily decreased, down 6.6%
year-over-year on a four-week moving average, but implied gasoline demand
readings improved, a sign that the sharp decline in prices at the
pump may be affecting consumption patterns, an analysis of the weekly oil data
from the Energy Information Administration showed Wednesday.

Gasoline demand inched down 93,000 b/d to 9.002 million b/d
week-over-week, for the reporting week ended November 7. But on a four-week
moving average, implied gasoline demand, while still 1.9% below year-ago
levels, has slightly improved over the past three reports. The previous week
implied gasoline demand was down 2.3% year-over-year.

As of November 10, retail gasoline prices averaged $2.224/gal, a drop of
17.6 cents/gal week-over-week and 88.7 cents/gal lower than year ago levels,
according to EIA.

But the current level of gasoline demand was still insufficient to cause
stocks to decline. Gasoline stocks increased 2 million barrels to 198.1
million barrels, and that was with imports having almost been halved. Gasoline
imports dropped 451,000 b/d to 589,000 b/d, but the decline was concentrated
in blending components.

Little improvement has been seen in distillate demand, which is more
closely correlated to the broader economy, but the likelier explanation is a
lack of demand for winter fuels. Distillate demand at 3.992 million b/d was
still down 4.6% year-over-year on a four-week moving average. The combination
of a lack of demand for heating oil and a jump in production given the profit
margins associated with middle distillates resulted in a 600,000-barrel build
in inventories.

While diesel stocks declined 700,000 barrels to 18.8 million barrels,
heating oil inventories increased 1.3 million barrels to 41.7 million barrels.
At 41.7 million barrels, US heating oil stocks were 11.6 million barrels below
the five-year average and 5.5558 million barrels below year-ago levels. Total
distillate stocks at 128.351 million barrels, were 1.293 million barrels above
the five-year average, but 5.061 million barrels below year-ago levels.

Both gasoline and distillate yields were fairly constant despite a
negative RBOB crack spread on NYMEX compared to the heating oil crack which
has been running at a $17/barrel premium. But the NYMEX crack spreads are not
always representative of margins along the Gulf Coast where refiners typically
run a heavier slate of crude and the sour grades have been running at steep
discount to the benchmark light sweet crude. The gasoline yield was 60%, a
fairly high level for this time of year while the distillate yield was 29.34%.

While product stocks were building, crude inventories were unchanged, but
for the fifth consecutive week, inventories at Cushing, Oklahoma -- home of
the NYMEX delivery point -- increased. Stocks at Cushing rose 441,000 barrels
to 17.985 million barrels.

--Linda Rafield, linda_rafield@platts.com