Analysis of US EIA data: US product stocks hit record high as demand wanes
New York - September 22, 2010
Stocks of middle distillates have started their seasonal descent, falling 1.265 million barrels to 173.589 million barrels, with the entire decline concentrated in ultra-low sulfur diesel, an analysis of the weekly oil data released Wednesday by the Energy Information Administration (EIA). 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.
Analysts polled by Platts had projected a 400,000 barrel build in middle distillates.
At 173.589 million barrels, stocks of middle distillates were 30.573 million barrels above the five-year average and 2.512 million barrels above year-ago levels with nearly the entire surplus against the averages in ultra-low sulfur diesel.
Heating oil inventories increased 1.185 million barrels to 52.365 million barrels, leaving stocks 2.292 million barrels above the five-year average and 1.181 million barrels above year-ago levels.
Declines of ultra-low sulfur diesel stocks in the third week of September are in line with seasonal norms as the Midwest readies for the harvest. Stocks of ultra-low sulfur diesel declined 1.44 million barrels to 28.818 million barrels in the Midwest and decreased 1.111 million barrels on the Gulf Coast, suggesting the product may be in either Explorer or TEPPCO pipelines en route to the Midwest.
Consistent with the stock draw in middle distillates, implied demand* jumped 210,000 barrels per day (b/d) to 3.899 million b/d. On a four-week moving average, demand for middle distillates at 3.841 million b/d was 454,000 b/d above year-ago levels, suggesting a pick-up in port and rail traffic.
Like middle distillates, demand for gasoline greatly rebounded. Gasoline demand surged 536,000 b/d to 9.383 million b/d, which was most likely the change in specifications that occurs at this time of year.
The bounce in gasoline demand more than offset an increase in output by refiners, causing stocks to fall 3.469 million barrels to 222.589 million barrels. Still, gasoline stocks were 23.995 million barrels above the five-year average and 11.137 million barrels above year-ago, leaving a large enough cushion during maintenance season when stocks tend to fall further on reduced production.
Stocks of gasoline on the Atlantic Coast declined 3.8956 million barrels to 57.872 million barrels, which according to EIA was a reclassification of finished gasoline to CBOB.
Crude stocks, like gasoline and middle distillates, declined. Crude stocks decreased 475,000 barrels to 357.86 million barrels. The entire decline occurred on the Atlantic Coast, where stocks fell 2.118 million barrels to 9.885 million barrels, the lowest level since 1990 when EIA began releasing a breakdown of this particular data.
Offsetting some of the decline in crude stocks on the East Coast was a 1.073-million-barrel build on the Gulf Coast, to 186.214 million barrels, and a 612,000 barrel build on the West Coast, where stocks climbed to 54.902 million barrels.
*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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