Analysis of US EIA data: US product stocks hit record high as demand wanes
New York - September 22, 2010
US product stocks rose 1.95 million barrels to a record 785.585 million barrels the week ending September 17 as demand edged lower, an analysis of the oil data released Wednesday by the Energy Information Administration (EIA) shows. This analysis and commentary is provided by Linda Rafield, Platts senior oil analyst and editor of the weekly Futures and Derivatives Review, a supplement to Platts Oilgram Price Report.
US product stocks were 67.872 million barrels above the five-year average and 20.385 million barrels above year-ago levels.
US oil demand declined 342,000 barrels per day (b/d) on the week to 19.177 million b/d, a two and a half month low. The majority of the drop in oil demand was concentrated in gasoline, with demand declining 172,000 b/d to 8.847 million b/d, a six-month low and just 57,000 b/d above the same week in 2009, a sign that the consumer is curtailing discretionary spending.
Demand for middle distillates was down 153,000 b/d to 3.689 million b/d week-over-week, but still 386,000 b/d above year-ago levels.
Stocks of every product were up week-over-week, with the exception of jet fuel, which declined 256,000 barrels to 48.111 million barrels.
Gasoline stocks climbed 1.59 million barrels to 226.058 million barrels while inventories of middle distillates increased 347,000 barrels to 174.854 million barrels. Gasoline stocks were 26.675 million barrels above the five-year average and 12.949 million barrels above year-ago levels while inventories of middle distillates were 31.117 million barrels above the five-year average and 4.1 million barrels above the same week 2009.
These are plush surpluses as refinery turnarounds kick off and product stocks tend to decline on lower output. But stocks may undergo minimal draws given what appears to be waning demand.
Crude stocks, too, increased, building 985,000 barrels to 358.335 million barrels with inventories generally building further as refiners run less petroleum during maintenance. The increase in crude stocks resulted from a 295,000 b/d jump in crude imports to 9.322 million b/d.
Over the past three weeks, crude imports into the Midwest have been essentially unchanged at 1.037 million b/d despite problems with Enbridge's Lines 6 A and B.
Still, stocks at Cushing, Oklahoma – home of the New York Mercantile Exchange (NYMEX) oil futures contract delivery point – edged down another 210,000 barrels to 34.744 million barrels.
Inventories at Cushing have declined a cumulative 3.092 million barrels over the past seven weeks despite a widening in the front-month spread for NYMEX crude futures.
*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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