Analysis of US EIA data: Crude oil stock decline concentrated on U.S. West Coast
New York - July 8, 2010
U.S. crude oil stocks fell 4.961 million barrels to 358.154 million barrels during the week ending July 2, with the draw occurring across all regions, according to data released Thursday 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.
The bullish impact of the week’s stock draw was muted somewhat considering that 1.971 million barrels of the decline occurred on the West Coast, which is largely disconnected from the bulk of the U.S. refining complex.
Crude inventories fell 870,000 barrels on the Atlantic Coast, 877,000 barrels in the Midwest and 952,000 barrels along the Gulf Coast.
However, it appears the data for the week ending July 2 did not reflect production shut-ins and a delay in imports due to Hurricane Alex. Crude imports edged down 68,000 barrels per day (b/d) to 9.413 million b/d despite the Louisiana Offshore Oil Port (LOOP) closing for two days, a loss of roughly 2.4 million barrels. Domestic crude production was up 157,000 b/d to 5.414 million b/d, EIA said.
The EIA report suggests the data linked to Hurricane Alex may be better reflected in next week's release.
Despite the 4.961-million-barrel draw, U.S. crude stocks are still 28.131 million barrels above the five-year average and 10.857 million barrels above year-ago levels.
But given refiner demand for crude barrels, as well as import and production levels, it would have been reasonable for stocks to decline just 2.807 million barrels.
Higher refinery run rates allowed all product stocks with the exception of residual fuel oil to build. With gross inputs climbing 262,000 b/d to 15.800 million b/d, more than the 135,000 b/d increase in crude runs, refiners were able to pump out higher volumes of light end products.
Residual fuel oil inventories fell 697,000 barrels to 42.648 million barrels, with demand soaring for power generation needs. Demand for residual fuel oil jumped 206,000 b/d to 568,000 b/d week-over-week.
Distillate demand surged 399,000 b/d to 3.949 million b/d, but stocks increased 324,000 barrels to 159.697 million barrels as imports soared and production held at a steady, but high, 4.356-million-b/d level. Stocks of middle distillates were still 29.549 million barrels above the five-year average, but only 959,000 barrels above year-ago levels. A rebound in demand has eroded the surpluses against the averages.
The increase in implied demand* for middle distillates and residual fuel oil caused total U.S. oil demand to climb 597,000 b/d to 19.558 million b/d.
Gasoline demand dipped just 13,000 b/d to 9.449 million b/d, another impressive reading, but one that would have been fairly seasonal prior to the U.S. recession.
Despite another demand reading over 9.4 million b/d, gasoline stocks increased 1.32 million as imports climbed another 223,000 b/d to 1.254 million b/d, the highest level since March 2009.
*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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