Analysis of US EIA data: Crude oil stocks fall for fourth consecutive week
New York - December 22, 2010
US crude stocks fell for the fourth consecutive week, shedding 5.33 million barrels to 340.685 million barrels for the week to December 17, as year-end tax considerations led to reduced holdings, despite increased imports and lower refinery runs, data from the Energy Information Administration (EIA) showed Wednesday.
The crude oil data was mostly in line with the American Petroleum Institute's (API) supply report released late Tuesday that showed a 5.796 million-barrel draw in US crude stocks. Analysts polled by Platts earlier in the week expected a 2.4 million-barrel draw in stock levels.
Still, US crude stocks remain 13.6 million barrels above year-ago levels when stocks were pegged at 327.5 million barrels, the EIA data showed.
Energy analyst Tim Evan of Citi Futures Perspective said the stock draw was a result of seasonal inventory management decisions to reduce holdings ahead of year-end, rather than a lack of available global supply.
The Gulf Coast region showed the largest draw in stocks of 6.1 million barrels to 167.3 million barrels, while Midwest stocks rose by 2 million barrels to 94.3 million barrels. Crude stocks at Cushing, Oklahoma – home of the New York Mercantile Exchange (NYMEX) crude oil futures contract delivery point – accounted for 36.4 million barrels of Midwest stocks, up from 35.9 million barrels the week prior.
Analysts at Credit Agricole said in a note that Cushing stocks are expected to increase further next week, as refiners are likely to continue to push crude oil into the mid-continent to avoid Texas and Louisiana year-end ad valorem taxes.
Since the week ending November 26, Gulf Coast crude stocks have fallen 16.982 million barrels to 167.294 million barrels. This exceeds the five-year average draw of 8.649 million barrels over the same three weeks, although this year companies looking to shed inventories back to early 2010 levels for tax purposes had to contend with a hefty stock surplus.
The week ending November 26, Gulf Coast crude stocks at 184.276 million barrels were 23.598 million barrels above January 1 levels. The five-year average shows a surplus of just 10.583 million barrels.
Total crude imports increased by 1.051 million barrels per day (b/d) to 8.741 million b/d last week, with the bulk of the increase seen in the Gulf Coast, which climbed 587,000 b/d to 5.195 million b/d. Imports were higher across the rest of the US with the exception of the East Coast and Rocky Mountains.
Refiners used less crude as runs declined by 0.3 percentage points to 87.7% of capacity, which was in line with analyst expectations of a drop in runs to 87.7%.
In products, US gasoline stocks climbed 2.4 million barrels to 217.173 million barrels last week as imports and production rose, while demand slipped, the EIA data showed.
Gasoline imports climbed to 1.007 million b/d from 876,000 b/d, while production rose 122,000 b/d to 9.457 million b/d. Most of the imports, as usual, arrived on the US Atlantic Coast. Imports climbed 88,000 b/d to 881,000 b/d, drawn by recent steep prices in the region.
As a result, Atlantic Coast gasoline stocks were up 112,000 barrels at 54.397 million barrels, the EIA data showed.
That's an improvement from 50.763 million barrels the week ending November 26, when stocks were 5.31% below the five-year average. Atlantic Coast gasoline stocks are still on the tight side, at roughly 1% below the five-year average.
US gasoline production was unusually high. At 9.457 million b/d, production was 438,600 b/d above the five-year average.
US gasoline demand slipped 136,000 b/d to 9.213 million b/d. On a four-week average, however, demand at 9.150 million b/d was higher for the third week in a row.
US distillate stocks fell 589,000 barrels to 160.716 million barrels. Despite the draw, the surplus to the five-year average grew to 17.47% from 16.94%.
Distillate production climbed 84,000 b/d to 4.63 million b/d, while imports edged slightly lower. But demand rose 278,000 b/d to 4.049 million b/d, helping draw down stocks.
Combined low sulfur diesel and ultra-low sulfur diesel (ULSD) stocks were down 145,000 barrels at 111.370 million barrels. High sulfur heating oil stocks on the Atlantic Coast – where the bulk of heating oil is consumed – fell 1.082 million barrels to 38.718 million barrels as frigid temperatures in the region lifted demand.
Atlantic Coast heating oil stocks have fallen 3.097 million barrels over the past two weeks, but such draws are typical for this time of year, and stocks are 9.5% above the five-year average, giving the area a bit of cushion.
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