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Weekly EIA stats on US Oil Stocks 07/09/2012

Published Wednesday, September 12th, 2012

The latest report from the EIA on US oil inventories was disapponting. In other words, it shows that Hurricane Isaac will not have a lasting legacy. The headline figures are more negative than the forecast and  also more bearish than the API statistics. Total commercial stocks increased after last week’s 10 million bbls drop. They are currently 11.8 million bbls or 1.1% above last year’s number and 17.2 million bbls or 1.6% higher than the 5-year average.

Analysts got it badly wrong when predicting a draw in crude oil inventories as they actually built by 2 million bbls. Stocks even grew in PADD3 where refiners were operating 79.6% of their total capacity (the lowest since February 2011). This compares with  the 91.4% pre-hurricane level whilst total refinery runs were down 1.4% on the week at 84.7%. In PADD2 Cushing stocks fell by 828,000 bpd easing the pressure on the WTI structure and on the WTI/Brent arbitrage, at least in theory. Crude oil imports are coming out of the storm-related halt as they increased by 530,000 bpd to 8.525 mbpd. Total crude oil stocks are 12.7 million bbls or 3.5% above last year’s level and 19.4 million bbls or 5.4% higher than the 5-year average.

The low refinery utilization in the USGC mostly had a great impact on gasoline stocks, which were down 1.4 million bbls in PADD3 and 1.2 million bbls nationwide. They are now 13 million bbls or 6.6% lower than this time of last year and 7.9 million bbls or 4% below the 5-year average.

The build in distillate stocks was bigger than the forecast but smaller than the APi figure. Stocks in this product have jumped more than 10 million bbls or 9% in little more than two months. This increase certainly takes the wind out of the NYME Heating Oil bulls’ sail ahead of the winter season, although total stocks are still  30 million bbls or 23.3% below the level we saw this time of last year and 23 million bbls or 17.9% lower than the 5-year average.

Total product demand fell 2.7% to 18.70 mbpd compared to the same period of last year on the 4-week average basis. Distillate demand (-11.9% at 3.40 mbpd) is the lowest for nearly three years on the same basis. Thirst for gasoline was only down 0.1% at exactly 9 mbpd. It was not a constructive report but the market might decide to focus on financial developments in coming hours and days.

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.