Analysis of U.S. EIA data
New York - April 21, 2010
U.S. crude oil stocks jumped 1.894 million barrels to 355.857 million barrels during the week ending April 16, as imports climbed and crude refinery runs inched lower, data released by the U.S. Energy Information Administration (EIA) showed Wednesday.
The data looked bearish for New York Mercantile Exchange (NYMEX) crude oil futures. Analysts polled by Platts earlier in the week were expecting a 300,000-barrel build in crude stocks.
Crude inputs fell 135,000 barrels per day (b/d) to 14.678 million b/d. Refinery utilization, however, climbed to 85.93% from 85.59% as total operable capacity was lowered to 17.584 million b/d from 17.688 million b/d.
Crude imports soared 733,000 b/d to 9.613 million b/d, recovering from the prior week's fall. Imports were below the five-year average of 9.84 million b/d, but on a four week moving average, imports at 9.279 million b/d were up for the third week in a row.
Imports were up on the week throughout the U.S., apart from the Rockies (PADD IV). Crude stocks primarily climbed in the Midwest (PADD II), up 3.84 million barrels to a record high 90.654 million barrels. This was especially bearish for the NYMEX crude oil future contract, as was a 1.854 million barrel build at Cushing, Oklahoma, the contract's delivery point.
The Cushing build will likely send the crude market into a deeper contango*. Midday Wednesday, the June/July crude spread price was 46 cents weaker, trading at minus $1.86/barrel.
U.S. crude stocks were 18.79 million barrels above the five-year average, widening from an 18.05 million barrel surplus from the week ending April 9. The Midwest surplus grew to 17.38 million barrels from 13.89 million barrels.
Gulf Coast (PADD III) crude stocks, however, fell 2.628 million barrels to 183.845 million barrels, the EIA data showed. Gulf Coast imports were 44,000 b/d higher at 5.773 million b/d, while crude inputs were 151,000 b/d lower at 7.559 million b/d, which would suggest a crude stock build. U.S. production was just 9,000 b/d lower at 5.466 million b/d.
But the large stock draw may have lagged an input rise. But Gulf Coast crude inputs had been climbing steadily since early February, from 6.376 million b/d the week ending February 2 to 7.71 million b/d the week ending April 9.
The stock draw left Gulf Coast stocks at just 4.63 million barrels above the five-year average, down from an 11.99 million barrel surplus the week ending April 2.
Refiners in the Gulf Coast have been pushing out product. Gasoline production in the region rose 160,000 b/d to 2.75 million b/d during the week ending April 16, the EIA data showed, which helped to push total U.S. gasoline production 148,000 b/d higher to 9.396 million b/d.
U.S. gasoline production has climbed steadily from 8.758 million b/d since the week ending March 5, with almost half of that 638,000 b/d rise coming from a 304,000 b/d increase in the Gulf.
The rise in U.S. production, along with a 185,000 b/d increase in gasoline imports to 756,000 b/d, resulted in a 3.587 million barrel U.S. stock build, the EIA data showed.
At 224.925 million barrels, U.S. gasoline stocks were 16.72 million barrels above the five-year average, up from a 10.73 million barrel surplus from the week ending April 9.
Atlantic Coast (PADD I) stocks were up 152,000 barrels on the week at 56.292 million barrels, while Gulf Coast stocks were up 984,000 barrels at 73.365 million barrels.
The builds were bearish for NYMEX RBOB prices. The bulls may point to the fact that the U.S. West Coast (PADD V) accounted for a good portion of the weekly stock build, 1.51 million barrels. The West Coast market is separate from the New York-basis NYMEX RBOB market, but surpluses across the country reflect a market well-supplied despite higher demand.
West Coast stocks were 5.31 million barrels above the five-year average last week, Gulf Coast stocks 5.09 million barrels above and Atlantic Coast 1.83 million barrels above.
U.S. gasoline demand fell 173,000 b/d to 9.152 million b/d last week, also contributing to the stock build. But, at 9.153 million b/d, gasoline demand on a four-week moving average was up for the ninth consecutive week, from 8.63 million b/d the week ending February 12.
U.S. distillate stocks were also higher last week, up 2.096 million barrels at 148.883 million barrels. That left inventories at 32.29 million barrels above the five-year average, growing from a 24.66 million barrel surplus the week ending March 19.
U.S. distillate imports were slightly lower, but production climbed 95,000 b/d to 4.057 million b/d. Also, implied demand** fell 117,000 b/d to 3.466 million b/d.
In contrast to gasoline, distillate demand on a four-week moving average has been on the decline, falling to 3.583 million b/d last week from 3.761 million b/d the week ending March 19.
That demand is trending lower after the end of heating oil season, which is not unusual. But distillate demand remains well below the five-year average, which is a bearish consideration for the NYMEX heating oil futures contract.
Atlantic Coast heating oil stocks at 33.779 million barrels last week were 12.16 million barrels above the five-year average, up from a 10.6 million barrel surplus at the beginning of April.
*Contango is the industry vernacular for the condition whereby prices for nearby delivery are lower than prices for future-month delivery.
**Implied demand is the amount of product that moves through the U.S. distribution system, not actual end consumption.
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