Analysis of US EIA data: Middle distillates hold surplus despite stock drop
New York - October 20, 2010
.S. stocks of middle distillates declined 2.155 million barrels to 170.055 million barrels, in line with seasonal tendencies, 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 Futures and Derivatives Review, a supplement to Platts Oilgram Price Report.
Middle distillate inventories for the week ending October 15 were 30.984 million barrels above the five-year average and 167,000 barrels above year-ago levels.
Nearly the entire decline was concentrated in ultra-low sulfur diesel (ULSD) with stocks falling 1.954 million barrels to 105.045 million barrels. The decline was concentrated in the Midwest and Gulf Coast, signaling the draw was related to the seasonal harvest. The additional ULSD is in either Explorer or TEPPCO pipelines en route to the Midwest from the Gulf Coast.
Stocks of heating oil inched up 66,000 barrels to 54.305 million barrels, leaving inventories 4.254 million barrels above the five-year average and 2.622 million barrels above year-ago levels.
While production of middle distillates was essentially unchanged at 4.243 million barrels per day (b/d), imports were an exceptionally low 140,000 b/d, down 48,000 b/d week-over-week with the Atlantic Coast taking the brunt of the decline.
But demand for middle distillates jumped 205,000 b/d to 3.954 million b/d week-over-week, resulting in the stock draw. Year-over-year, middle distillate demand at 3.82 million b/d was 325,000 b/d above year-ago levels. The fourth quarter is generally the highest demand period of the year as winter fuel needs and the harvest cause a draw on stocks.
U.S. oil demand, however, slipped and on a four-week moving average at 18.723 million b/d was 89,000 b/d below the same week the previous year.
While gasoline demand edged higher, the increase was not sufficient to pull on stocks. Gasoline demand inched up 79,000 b/d to 8.891 million b/d and on a four-week moving average at 9.019 million b/d was 131,000 b/d below year-ago levels, a sign that consumers were curtailing their driving.
Gasoline stocks increased 1.155 million barrels to 219.329 million barrels, leaving inventories 30.984 million barrels above the five-year average and 12.384 million barrels above year-ago levels. This was a counter seasonal increase in stocks, which resulted from relatively low levels of demand.
Despite the build in gasoline stocks, total product stocks declined 2.689 million barrels to 770.996 million barrels. U.S. oil stocks have now decreased 14.589 million barrels over the past four consecutive weeks, having fallen from an all-time high of 785.585 million barrels.
Crude stocks edged up 667,000 barrels to 361.199 million barrels, as imports rebounded 472,000 b/d to 8.6 million b/d, but the bounce occurred on the East and West coasts. Imports on the Gulf Coast decreased 301,000 b/d to 4.757 million b/d, an eight-month low. The last time crude imports on the Gulf Coast were this low was February 2010, also when refineries were in turnaround.
At 361.199 million barrels, crude stocks were 38.045 million barrels above the five-year average and 22.127 million barrels above year-ago levels.
*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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