Analysis of US EIA data: Product stocks dip as refiners drop output
New York - June 16, 2010
Despite a pullback in U.S. oil demand, product stocks declined 2.438 million barrels to 726.594 million barrels the week ending June 11, as refiners throttled back on output, an analysis of the data released Wednesday by the U.S. Energy Information Administration (EIA) showed.
Still, U.S. product stocks were 36.158 million barrels above the five-year average, but 14.906 million barrels below year-ago levels.
Total U.S. oil inventories (which includes raw crude and petroleum products) edged up 1.689 million barrels to 1.091 billion barrels with all of the increase concentrated in crude inventories. At 1.091 billion barrels, U.S. petroleum stocks were 63.46 million barrels above the five-year average, but 8.905 million barrels below year-ago levels.
Meanwhile, crude stocks climbed a similar 1.69 million barrels to 363.105 million barrels, in contrast to analyst expectations for a draw of 1.75 million barrels. This puts U.S. crude stocks 26.615 million barrels above the five-year average and 5.384 million barrels above year-ago levels. At the New York Mercantile Exchange’s (NYMEX) critical futures contracts delivery point in Cushing, Oklahoma, crude inventories edged up 194,000 barrels to 37.61 million barrels, just 335,000 barrels off the all-time high posted the week ending May 14.
U.S. implied oil demand continued to slip for the second week in a row, dipping 180,000 barrels per day (b/d) to 19.322 million b/d. Nearly every product category dropped, with the exception of gasoline and "other oils." The biggest declines in implied demand occurred in residual fuel oil and propane and propylene. Implied demand is the amount of product that moves through the U.S. distribution system, not actual end consumption.
The gradual decline in implied demand gave refiners reason to lower output of light-end product. A drop-off in implied demand in mid-June is fairly seasonal as is a decline in run rates or refinery utilization; both are expected to swing back to the upside shortly ahead of the July Fourth weekend.
Crude runs dipped a slight 73,000 b/d to 15.144 million b/d while gross inputs dropped 202,000 b/d to 15.458 million b/d. This allowed refiners to increase production of heating oil and jet fuel.
Despite plush inventory levels, stocks of middle distillates climbed another 1.798 million barrels to 156.622 million barrels, with increases spread across both ultra-low sulfur diesel and heating oil as high prices attracted additional supply. Middle distillate stocks were 31.831 million barrels above the five-year average and 6.596 million barrels above year-ago levels, with three more months of potential stock-building on the horizon before demand starts to ratchet up.
*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. Please contact Kathleen Tanzy if you require any additional information or would like to interview Linda Rafield.
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This analyst survey is conducted by Platts’ editorial team in Washington DC and is published every Wednesday morning, one day ahead of the 10:30 am (EST) Thursday release of the weekly natural gas storage report of the US Energy Information Administration. Platts has been conducting this survey since January 2007. IMPORTANT NOTE TO EDITORS: The survey results attached above do not contain commentary from a Platts staff member. The survey is conducted and prepared by the Platts market news editors, but the views are those of non-Platts market analysts. The survey includes 15 to 25 analysts, some on a rotational basis. This differs from the weekly pre-report analyst survey of EIA/API US oil stocks data conducted each week by Platts editors, which does include the views of Platts’ editors.
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