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Commentary on weekly EIA statistics 19/12/2012

Published Wednesday, December 19th, 2012

The EIA was singing from the same hymn sheet as the API but a little less loud. Similarly to the API, crude oil and distillate inventroies decreased whilst gasoline stocks built. The net result is total commercial stocks falling by 2 million bbls. Despite the drop they are still comfortably above both the year-ago level and the 5-year average.

The reasons behind the drop in crude oil inventories are falling imports (-0.1 mbpd at 8.356 mbpd) and increasing refinery utilization (+1.1% at 91.5%). The crude figure is actually neutral since PADD1-3 combined only drew 52,000 bbls. Another jump in domestic crude oil production (it was at 6.863 mbpd, a new 18-year high) probably does not come as a surprise. Total crude oil stocks sit at a comfortable level. They are 14.9% higher than a year ago and 10% above the 5-year average. Cushing stock increased marginally and currently are less than 800,000 bbls below the all-time high. In a nutshell, the crude oil stocks are at a comfortable level in the US.

The same can be said about gasoline inventroies although they are not very much above the historical levels (+0.4% above last year’s stock and +1.9% than the 5-year average). However, they have built nearly 19 million bbls over the last 4-weeks, the biggest jump for nearly 20 years. The biggest jump occured in the USGC where refiners operated at 96.5% of their capacity. It is the highest level since the beginning of 2010, when record started.

The drop in distillate stocks can be viewed as bullish as it takes stocks in this product 34.9% below last year’s level and 37.6% below the 5-year average. Total product imports stood at 2.42 mbpd last week, product exports at 2.901 mbpd meaning that the country was a net exporter of products (481,000 bpd).

Price support might come from increasing demand for products which jumped by 2.8% last week on the 4-week average basis  to 19.02 mbpd.This increase came despite distillate demand fell by 2.7% to 3.77 mbpd and gasoline demand by 2.9% to 8.47 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.