Analysis of U.S. EIA data
New York - May 12, 2010
U.S. crude oil stocks climbed 1.949 million barrels to 362.524 million barrels the week ending May 7, as refinery runs fell and the flow of imported barrels remained steady, data released by the U.S. Energy Information Administration (EIA) showed Wednesday.
Crude inputs slipped 110,000 barrels per day (b/d) to 15.036 million b/d, putting refinery utilization 1.2 percentage points lower at 88.4% of capacity. Inputs edged lower across the country, apart from the Midwest, which saw a 139,000 b/d rise to 2.378 million b/d.
The drop still left U.S. inputs well above the depressed levels seen earlier this year. Inputs have gradually recovered from 13.46 million b/d at the end of January as refiners have exited maintenance, and been lured into raising output by strengthening prices in product crack spreads. A product crack spread is the price difference between the cost of the raw barrel of crude oil versus the price of the products that can be refined from that barrel.
U.S. crude imports fell 264,000 b/d, the EIA data showed, but at 9.687 million b/d remained near the prior week's year-to-date high of 9.951 million b/d.
On a four-week moving average, imports at 9.733 million b/d the week ending May 7 were up for the sixth consecutive week, from 8.844 million b/d the week ending March 26.
The steady flow of imports can likely be attributed not only to higher refinery demand, but to a wide New York Mercantile Exchange (NYMEX) light sweet crude contango*, which has created the incentive to store barrels. The price spread between the front- and second-month crude futures spread price traded at minus $4 per barrel (/b) early Wednesday, compared to minus 40 cents/b at the end of March.
Stocks at the NYMEX crude oil futures contracts delivery point of Cushing, Oklahoma rose 800,000 barrels to an all-time high of 37.03 million barrels, the EIA data showed, which can be viewed as a bearish consideration for the NYMEX contango.
U.S. Gulf Coast crude stocks were down 2.651 million barrels last week at 184.99 million barrels, as imports fell 382,000 b/d to 5.429 million b/d. The American Petroleum Institute Tuesday had reported a much larger 1.536 million b/d drop in Gulf Coast imports.
Crude stocks climbed in the rest of the country, with the West Coast showing the largest build, up 1.802 million barrels at 53.774 million barrels.
For the week ending May 7, U.S. gasoline stocks shrank by 2.82 million barrels to 222.13 million barrels, according to the EIA.
U.S. gasoline stocks are now 15.9 million barrels over their five-year average, but still about 2 million barrels lower than the previous week's five-year average.
U.S. distillate stocks rose by 1.396 million barrels the week ending May 7 to 153.79 million barrels and were 35.39 million barrels over the five-year average, essentially unchanged from the prior week's (the week ending April 30) five-year average.
U.S. gasoline and distillate imports declined week-over-week by 293,000 b/d and 31,000 b/d, respectively, while U.S. gasoline production shrank by 181,000 b/d.
U.S. distillate production rose to 4.3 million b/d, an increase of 143,000 b/d and marking the highest production since January 9, 2009.
Gasoline stock draws were reported in on the East, Gulf and West coasts, while builds were seen in the Midwest and the Rocky Mountains. Distillate builds were noted in the East and West coasts and the Rockies, while stock draws were reported in the Midwest and the Gulf Coast.
*Contango is the industry vernacular for the condition whereby prices for nearby delivery are lower than prices for future-month delivery.
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