EIA analysis: drop in crude stocks highlights the week before the big report

It’s hard during the events of Superstorm Sandy to worry too much about what happened in oil markets last week. It seems like eons ago. So consider this week’s EIA data and analysis of it to be like looking at a past that was very different from the present, even though it was only a few days ago. (That reminds us of the famous statement of the noted quipster and baseball reliever, the late Dan Quisenberry, who said: “I’ve seen the future and it’s much like the present, only longer.”)

Next week’s report, discussing what happened the week of Sandy, ought to be very interesting. But you can read our analysis of last week’s numbers here.

Analysis of US EIA data: U.S. Crude Oil Stocks Decline 2 Million Barrels

New York - November 1, 2012

U.S. commercial crude oil stocks fell 2.045 million barrels to 373.081 million barrels in the reporting week that ended October 26, U.S. Energy Information Administration (EIA) data showed Thursday.

The draw is counter to analysts polled by Platts, who Monday expected crude stocks to rise by 2 million barrels.

Despite the decline, U.S. crude stocks are still amply supplied, sitting 11.83% above the EIA's five-year average.

The decline comes as U.S. crude oil imports fell 901,000 barrels per day (b/d) to 7.922 million b/d and gross inputs to U.S. refineries rose 91,000 b/d to 15.247 million b/d.

As a result, U.S. refinery utilization rates increased 0.5 percentage points to 87.7% of capacity. Analysts expect U.S. refinery utilization rates to remain unchanged.

The EIA data showed the draw was largest on the U.S. Gulf Coast, where crude stocks fell 1.696 million barrels to 183.132 million barrels. Imports to the Gulf Coast fell 688,000 b/d to 3.959 million b/d. Refinery inputs rose 234,000 b/d to 7.788 million b/d.

U.S. Midwest crude stocks fell 419,000 barrels to 105.896 million barrels, led by a 671,000 barrel decline in Cushing, Oklahoma, stocks. At 43.394 million barrels, stocks at Cushing – the delivery point for the New York Mercantile Exchange (NYMEX) crude oil futures contract – are at their lowest since late April.

Crude oil imports from Canada, a large portion of which head to the Midwest at Cushing, fell 115,000 b/d to 1.995 million b/d as TransCanada's 591,000 b/d Keystone Pipeline was running at reduced rates.

Meanwhile, imports from Mexico fell 324,000 b/d to 812,000 b/d; imports from Venezuela fell 273,000 b/d to 666,000 b/d; and imports from Colombia fell 407,000 b/d to 147,000 b/d.

Imports from Saudi Arabia were steady, down a slight 31,000 b/d to 1.221 million b/d. Imports from Nigeria rose sharply, up 375,000 b/d to 787,000 b/d.

U.S. Atlantic Coast (USAC) crude stocks fell 351,000 barrels to 10.548 million barrels, while U.S. West Coast stocks rose 318,000 barrels to 55.312 million barrels.

U.S. demand for refined products fell 810,000 b/d to 18.326 million b/d, however the bulk of this was in the EIA’s "Other Oils" category. U.S. demand for finished motor gasoline increased last week, nudging 351,000 b/d higher to 8.844 million b/d, the highest since the end of August.

While U.S. demand for distillates rose slightly last week, increasing 17,000 b/d to 3.543 million b/d, on a four-week average U.S. distillate demand is down 137,000 b/d to 3.693 million b/d.

Meanwhile, U.S. gasoline stocks rose 935,000 barrels to 199.502 million barrels, led by a 1.460-million-barrel increase in Gulf Coast stocks, which rose to 70.476 million barrels.

The increase brings U.S. gasoline stocks closer in line with the EIA five-year average, tightening the deficit to 1.91% of capacity, down from 2.54% in the reporting period that ended October 19.

Analysts polled expected U.S. gasoline stocks to decline by 900,000 barrels. West Coast gasoline stocks also rose, increasing 699,000 barrels to 28.688 million barrels.

Atlantic Coast gasoline stocks fell a bullish 202,000 barrels to 47.892 million barrels. Home to the New York Harbor-delivered NYMEX RBOB contract, the Atlantic Coast is particularly sensitive to stock changes.

USAC gasoline stocks are 7.71% below the EIA five-year average.

And although about 26% of the U.S. Northeast's 1.17 million b/d refining capacity remained offline as of Wednesday due to Hurricane Sandy, much of this would not show up in the EIA’s data for the week that ended October 26.

However, a bullish draw in stocks ahead of Sandy's impact is likely to continue to support RBOB futures.

Meanwhile, U.S. distillate stocks fell 93,000 barrels to 117.925 million barrels last week, led by declines in the Atlantic Coast.

Analysts expected distillate stocks to decline by 1.5 million barrels.

U.S. distillate stocks are nearly 20% below the five-year average.

USAC distillate stocks fell 687,000 barrels to 38.834 million barrels, although the main demand center in the region – the Central Atlantic – saw distillate stocks rise 198,000 barrels to 20.428 million barrels.

Central Atlantic heating oil stocks fell 285,000 barrels to 11.579 million barrels.

Gulf Coast distillate stocks rose 734,000 barrels to 35.997 million barrels, although ultra low sulfur diesel stocks fell 253,000 barrels to 27.469 million barrels.

# # #

About Platts: Founded in 1909, Platts is a leading global provider of energy, petrochemicals and metals information and a premier source of benchmark prices for those markets. Platts' news, pricing, analytics, commentary and conferences help customers make better-informed trading and business decisions and help the markets operate with greater transparency and efficiency. Customers in 150 countries benefit from Platts’ coverage of the oil, petrochemicals, natural gas, electricity,coal, nuclear power, shipping, and metals markets. A division of The McGraw-Hill Companies, Platts has approximately 900 employees in more than 15 offices worldwide.

About The McGraw-Hill Companies: McGraw-Hill announced on September 12, 2011, its intention to separate into two public companies: McGraw-Hill Financial, a leading provider of content and analytics to global financial markets, and McGraw-Hill Education, a leading education company focused on digital learning and education services worldwide. McGraw-Hill Financial's leading brands include Standard & Poor's Ratings Services, S&P Capital IQ, S&P Indices, Platts energy information services and J.D. Power and Associates. With sales of $6.2 billion in 2011, the Corporation has approximately 23,000 employees across more than 280 offices in 40 countries. Additional information is available at www.mcgraw-hill.com.