Cushing crude inventories hit all-time high
Analysis of US EIA data
New York - March 2, 2011
Crude stocks at the New York Mercantile Exchange (NYMEX) futures contracts delivery point in Cushing, Oklahoma, hit an all-time high of 38.57 million barrels during the week ending February 25, the US Energy Information Administration (EIA) said Wednesday.
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 Oilgram Price Report.
Total US crude stocks edged down 364,000 barrels to 346.375 million barrels, which contrasts with analysts’ expectations for a build of 1.6 million barrels.
US crude stocks are 15.002 million barrels above the five-year average and 4.804 million barrels above year-ago levels.
Crude inventories in the Midwest climbed 2.16 million barrels, suggesting the build in Cushing was the result of barrels coming down from Canada, while stocks along the Gulf Coast declined 3.681 million barrels.
Crude imports dipped 96,000 barrels per day (b/d) to 8.01 million b/d, but the decrease was concentrated on the West Coast. West Coast crude imports fell 169,000 b/d to 1.071 million b/d, but given limited refining capacity in that region, a decline of one or two cargoes can have a larger percentage effect on the import figure.
While imports edged down, crude inputs to refineries jumped 263,000 b/d to 13.798 million b/d, with the Gulf Coast accounting for a good portion of the increase, EIA said.
While demand for crude barrels picked up, product demand took a sharp turn to the downside. Product demand dropped 766,000 b/d to 19.08 million b/d, with "other oils" accounting for the bulk of the decline. Demand for other oils fell 593,000 b/d to 3.176 million b/d.
On a four week moving average, oil demand at 19.585 million b/d was just 271,000 b/d above the same four weeks in 2010.
Despite what appears to be mediocre demand readings, low refiner output has led to a dramatic reduction in product inventories. US product stocks declined 6.165 million barrels to 740.708 million barrels, leaving inventories 22.4 million barrels above the five-year average, but 320,000 barrels below year-ago levels. Year-to-date, US product stocks have eroded a cumulative 23.692 million barrels.
Contributing to this week's decline was a drop of 3.59 million barrels in gasoline stocks and a decrease of 751,000 barrels in middle distillates.
Gasoline imports were steady at 808,000 b/d and demand was 9.162 million b/d, both essentially unchanged from the previous week. Gasoline output was up 83,000 b/d at 9.226 million b/d.
Gasoline demand, while up only 62,000 b/d at 9.162 million b/d, was at a level warranting either higher domestic production or an increase in imports to prevent further erosion in inventories. At 8.899 million b/d on a four-week moving average, gasoline demand is just 91,000 b/d above year-ago levels, reflecting a combination of high-flying prices at the pump and still-high levels of unemployment.
Distillate demand at 3.753 million b/d on a four-week moving average was just 9,000 b/d above the previous year, reflecting the state of the US economy and a recent slowdown in road and rail traffic. Heating oil stocks declined 1.223 million barrels to 38.015 million barrels, in line with seasonal tendencies and demand for winter fuel.
At 159.186 million barrels, US middle distillate stocks were 25.184 million barrels above the five-year average and 7.365 million barrels above year-ago levels, with all of the surplus concentrated in ultra-low sulfur diesel (ULSD) inventories.
*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. If you require any additional information or would like to interview Linda Rafield, please e-mail Kathleen Tanzy.
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