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Weekly EIA report on US oil stocks 26/09/2012

Published Wednesday, September 26th, 2012

The latest data from the EIA on US oil inventories were not bearish despite the initial market reaction was. Firstly, crude and the main products all drew against API builds. Secondly, gasoline inventories are at a 4-year low and thirdly net crude oil imports hit their lowest level since December 2011. Total commercial stocks fell by 2.7 million bbls. They are 24.7 million bbls or 2.2% higher than this time of last year and 30.4 million bbls or 2.8% above the 5-year average.

The draw in crude oil stocks was a surprise and it was due to the 3 million bbl drop on the US East Coast. This fall is mysterious as refinery utilization in PADD1 fell by 8.6% to 82.5% indicating less  demand for crude oil. Crude oil inventories were more or less unchanged in the rest of the country with stocks at Cushing, Oklahoma dropping by a mere 83,0000 bbls to 43.73 million bbls. Nationwide crude oil stocks are 24 million bbls or 6.6% higher than a year ago and 27 million bbls or 7.7% higher than the 5-year average.

The surge in NYMEX RBOB prices over the last two days can probably be attributed to an other draw in gasoline stocks when the forecast was for a build. Although the decrease was not significant, nevertheless it pushed inventories in this product to levels not seen since October 2008. Current stocks in gasoline are 19 million bbls or 9.7% below last year’s level and 9.2 million bbls or 4.7% below the 5-year average.

The fall in distillate inventories was not huge either but it should be set against a forecast of a slight build and against the fact that current levels are 30 million bbls or 23.5% lower than this time of last year and 23.3 million bbls or 18.2% below the 5-year average.  One explanation behind the rather unexpected drop in product stocks could be rising net weekly exports that stood at 825,000 bpd, up from 703,000 bpd last week.

It was certainly not domestic demand that pushed product stock levels lower. Total product demand fell 3.4% to 18.4 mbpd compared to last year on the 4-week average basis. Gasoline demand fell by 1% to 8.82 mbpd and distillate demand was down by 8.7% at 3.47 mbpd on the same basis.

Posted by Tamas Varga

Tamas Varga has been in the oil industry since 1992 and with PVM for 18 years. During his time in the industry he has gathered a range of experience in the oil markets. At PVM Tamas is in charge of data collection and analysis.