Analysis of U.S. EIA data: Cushing, Oklahoma crude stocks hit all-time high

New York - January 6, 2010

Crude stocks at Cushing, Oklahoma, home of the New York Mercantile Exchange (NYMEX) futures contract delivery point, hit an all-time high of 35.67 million barrels the week ending January 1, according to data released Wednesday by the U.S. Energy Information Administration (EIA).

The previous high in Cushing inventories was 34.916 million barrels for the week ending February 6, 2009.

Cushing stocks climbed 1.158 million barrels while overall U.S. crude stocks rose by 1.329 million barrels. This was the first build in U.S. crude stocks in five weeks.

At 35.67 million barrels, Cushing stocks were 9.817 million barrels above the five-year average and 7.527 million barrels above year-ago levels, substantially below levels seen when stocks were 34.916 million barrels.

Analysts polled by Platts had projected a draw of 1.6 million barrels.

Despite a decline in crude imports of 33,000 barrels per day (b/d) to 1.334 million b/d in the Midwest and an increase in refinery inputs of 175,000 b/d to 3.37 million b/d, stocks at Cushing increased while Midwest stocks edged down 100,000 barrels to 89.234 million barrels; the data suggests that refiners further north in this region drew stocks and increased product output.

Crude stocks declined in every region except the Gulf Coast, where they jumped 4.33 million barrels to 160.678 million barrels, with a drop in refinery inputs behind the build.

U.S. commercial crude stocks were 21.248 million barrels above the five-year average, but only 1.918 million barrels above the year-ago level. Comparisons to year-ago levels became less glaring from the end of September 2009 and forward, as refiners cut crude purchases in response to a freefall in demand as a result of the global financial and banking crisis.

Total U.S. demand week-on-week dropped 307,000 b/d last week to 18.755 million b/d, the lowest demand reading in one month. Gasoline accounted for much of the decline. Gasoline demand fell 333,000 b/d to 8.741 million b/d; winter storms across the U.S. likely kept motorists off the roads. This is the lowest gasoline demand figure in nearly one year.

The decline in gasoline demand contributed to a 3.737-million-barrel build in gasoline stocks. Gasoline production and imports edged higher as well, but the drop-off in demand was the primary driver of the stock build. Gasoline output was up and throughputs were down 72,000 b/d at 14.12 million b/d, as refiners pushed yields to an exceptionally high level of 64.24%.

Distillate yields were an unexceptional 26.98%. Still, refiners upped the output of middle distillates by 99,000 b/d to 3.809 million b/d, well below average production levels normally seen at this time of year when winter fuel demand goes into high gear.

Heating oil stocks decreased 1.329 million barrels to 43.101 million barrels while stocks of ultra-low sulfur diesel climbed 2.62 million barrels to 97.592 million barrels. At 159.048 million barrels, middle distillate stocks were 26.579 million barrels above the five-year average and 21.227 million barrels above year-ago levels after this week's 233,000-barrel draw.

For more information on crude oil, visit the Platts website.

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