Analysis of US EIA data: U.S. gasoline output hits record high as demand dips
New York - July 14, 2010
U.S. gasoline production hit an all-time high of 9.508 million b/d the reporting week ending July 9, according to data released Wednesday by the Energy Information Administration, even as demand was tapering off, according to data released Wednesday by the U.S. Energy Information Administration (EIA). This analysis and commentary is provided by Linda Rafield, Platts senior oil analyst and editor of the weekly Platts Futures and Derivatives Review, a supplement to Platts Oilgram Price Report.
Very attractive margins two months ago when the crude slate was decided provided the economic incentive for refiners to maximize gasoline output.
As result of high output and a decline of 369,000 barrels per day (b/d) in implied demand*, gasoline stocks rose 1.601 million barrels to 221.036 million barrels. Gasoline stocks were 9.505 million b/d above the five-year average and 6.458 million barrels above year-ago levels.
U.S. petroleum demand dropped a precipitous 781,000 b/d to 18.777 million b/d, with the decline occurring in every product except jet fuel.
Implied demand* for middle distillates fell 422,000 b/d to 3.527 million b/d on a week-over-week basis.
On a four-week moving average, gasoline demand at 9.308 million b/d was 164,000 b/d above year-ago levels, while demand for middle distillates at 3.701 million b/d was 423,000 b/d above the same four weeks of 2009.
But 2009 provided an abnormally low baseline for implied demand given the state of the U.S. economy.
Production of middle distillates climbed to a six-month high of 103,000 b/d to 4.459 million b/d, also benefiting from attractive margins in mid-May. High output of middle distillates and the drop in demand resulted in a 2.943-million-barrel build in stocks. At 162.64 million barrels, inventories of middle distillates were 30.894 million barrels above the five-year average and 3.349 million barrels above year-ago levels.
Inventories of ultra-low sulfur diesel increased 2.1 million barrels to 102.9 million barrels, while heating oil stocks rose 1.9 million barrels to 47.8 million barrels. Only a 1.1-million-barrel decline in diesel stocks moderated the inventory build in middle distillates. With another three months before demand starts to ramp up seasonally, courtesy the crop harvesting in the Midwest and winter fuel needs, stocks of middle distillates could potentially increase surpluses against the averages by an even wider margin.
While gasoline and middle distillate stocks were up, inventories of jet and residual fuel oil dipped week-over-week, leaving product stocks unchanged at 726.591 million barrels. U.S. product stocks were 17.221 million barrels above the five-year average, but 44.609 million barrels below year-ago levels.
Total U.S. petroleum stocks fell 5.067 million barrels to 1079.687 billion barrels with all of the decrease concentrated in crude oil inventories. Crude stocks declined 5.058 million barrels to 353.096 million barrels, with nearly the entire draw occurring along the Gulf Coast. Both lower domestic production and a 132,000 b/d drop in imports to 9.281 million b/d were behind the stock decline. Domestic production slipped 62,000 b/d to 5.352 million b/d.
While overall crude stocks fell, inventories at Cushing, Oklahoma -- home of the New York Mercantile Exchange (NYMEX) crude oil futures contract delivery point -- edged up 314,000 barrels to 36.119 million barrels. This broke three consecutive weeks of stock draws in that region.
*Implied demand is the amount of product that moves through the U.S. distribution system, not actual end consumption.
*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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