Analysis of US EIA data: US oil product inventories tumble on low imports, output; Crude stocks build on higher imports
New York - March 16, 2011
US oil product inventories tumbled 6.857 million barrels during the week ending March 11, bringing the year-to-date decline to 39.348 million barrels, data released Wednesday by the Energy Information Administration (EIA) 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 Oilgram Price Report.
At 689.052 million barrels, US product stocks were 13.248 million barrels above the five-year average, but 5.773 million barrels below year-ago levels.
The combination of less-than-optimal imports along with a steady pace of demand has eroded what was a hefty inventory overhang at the start of 2011.
US oil demand dropped 557,000 barrels per day (b/d) week-over-week to 19.111 million b/d, with a sharp decrease in gasoline consumption leading the way, the EIA data showed. On a four-week moving average, oil demand at 19.351 million b/d was just 4,000 b/d greater than year-ago levels, having slowed from a faster pace of growth seen in January.
Gasoline demand declined 362,000 b/d to 8.83 million b/d, in line with the high readings seen in the prior three reports. The high readings were likely representative of summer-grade gasoline moving through the distribution system. Specification changes that occur mid-March each year tend to cause high demand readings that do not aptly reflect actual end-consumption.
Despite the drop in gasoline demand, inventories fell 4.174 million barrels to 225.04 million barrels, 3.521 million barrels more than the five-year average, but 2.234 million barrels less than year-ago levels. A steep decrease in both production and imports caused gasoline stocks to decline for the fourth consecutive week. Over those four weeks, gasoline stocks have declined 16.056 million barrels.
Gasoline output fell 282,000 b/d to 8.744 million b/d, while imports dropped 113,000 b/d to an unseasonable low of 648,000 b/d.
Production of middle distillates was up just 43,000 b/d at 4.115 million b/d while imports were down 91,000 b/d at 161,000 b/d, EIA said. Demand for middle distillates, however, was down 297,000 b/d at 3.91 million b/d. But the decrease failed to prevent a draw in both ultra-low-sulfur diesel (ULSD) and heating oil.
Middle distillates stocks were down 2.601 million barrels at 152.608 million barrels, with most of the decline concentrated in ULSD. Inventories of ULSD fell 2.173 million barrels to 106.427 million barrels, while stocks of heating oil edged down 641,000 barrels to 36.966 million barrels. A draw in each product at this time of year is in line with seasonal tendencies, with spring planting in the Midwest pulling on inventories and ongoing cold temperatures along the Atlantic Coast causing heating oil inventories to drop.
While product stocks underwent a substantial decline, crude inventories rose 1.745 million barrels to 350.636 million barrels on higher imports.
Crude imports climbed 381,000 b/d to 8.681 million b/d, with most of the increase occurring on the US Gulf Coast. Crude imports on the US Gulf Coast jumped 410,000 b/d to 5.115 million b/d. There appears to have been a build up of cargoes due to recent bad weather that closed the Houston Ship Channel.
As a result of the climb in crude imports on the Gulf Coast, inventories in that region were up 2.865 million barrels to 172.416 million barrels. However, imports into the Midwest dropped, causing stocks to fall 1.252 million barrels to 101.782 million barrels, despite higher imports from Canada week-over-week.
Canadian imports rose 215,000 b/d to 2.179 million b/d. But that crude oil appeared to stay north in the Midwest region, given that stocks at Cushing, Oklahoma – home of the New York Mercantile Exchange’s (NYMEX) crude oil futures contracts delivery point – declined 243,000 barrels to 40.02 million barrels, coming off an all-time high.
*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.
# # #
About Platts: Platts, a division of The McGraw-Hill Companies (NYSE: MHP), is a leading global provider of energy and commodities information. With a century of business experience, Platts serves customers across more than 150 countries. An independent provider, Platts serves the oil, natural gas, electricity, emissions, nuclear power, coal, petrochemicals, shipping, and metals markets from 17 offices worldwide. Platts' real-time news, pricing, analytical services and conferences help markets operate with transparency and efficiency.Traders, risk managers, analysts, and industry leaders depend upon Platts to help them make better business decisions.
About The McGraw-Hill Companies:: Founded in 1888, The McGraw-Hill Companies is a leading global financial information and education company that helps professionals and students succeed in the Knowledge Economy. Leading brands include Standard & Poor’s, McGraw-Hill Education, Platts energy information services and J.D. Power and Associates. The Corporation has approximately 21,000 employees with more than 280 offices in 40 countries. Sales in 2010 were $6.2 billion. Additional information is available at www.mcgraw-hill.com.
To subscribe or visit go to: http://www.platts.com
