Analysis of EIA data: Commercial crude stocks drop while SPR fills up
New York, NY - March 4, 2009
US crude oil stocks edged down 757,000 barrels last week as refinery inputs rebounded strongly and deliveries to the US Government's Strategic Petroleum Reserve (SPR) took additional barrels off the commercial market, an analysis of weekly US Energy Information Administration (EIA) data showed Wednesday.
As part of the US program to refill the SPR, 732,000 barrels of crude oil was taken off the commercial market, contributing to an unexpected decline in total US crude inventories. It was the largest amount of crude put into the SPR so far this year.
Still, at 350.59 million barrels, total US commercial crude stocks were 41.221 million barrels above the five-year average and 45.141 million barrels above year-ago levels, a cushy surplus. Analysts polled by Platts expected crude stocks to climb 2.2 million barrels last week.
Crude inputs jumped 409,000 barrels per day (b/d) to 14.345 million b/d, with declines in the Atlantic Coast, Midwest and West Coast markets more than offset by a 720,000 b/d jump along the Gulf Coast. The increase in crude inputs indicates refinery restarts following maintenance at some facilities.
Meanwhile, crude imports climbed 259,000 b/d to 9.028 million b/d, with nearly all of the increase concentrated along the Gulf Coast.
Crude inputs declined 140,000 b/d to 3.068 million b/d in the Midwest, while imports into the region fell 169,000 b/d to 1.041 million b/d. The decline in imports into the region resulted in a 500,000-barrel drop in inventories at Cushing, Oklahoma -- home of the New York Mercantile Exchange's (NYMEX) delivery point.
Cushing crude oil stocks have now declined 963,000 barrels over the past three weeks, suggesting the region had run up against what may have been operable capacity limits, combined with a drop-off in Canadian imports.
Volumes on Enbridge's Line 1 were reduced due to lower supply, having dropped to 122,498 b/d February 24 from its maximum capacity of 240,000 b/d, while Line 13 suffered a 24-hour outage February 25.
While crude stocks fell unexpectedly, product inventories increased.
Gasoline inventories inched up 168,000 barrels to 215.51 million barrels as refiners increased output. Imports climbed back above 1 million b/d despite another jump in implied demand. Implied demand is the amount of product that moves through the US distribution system; it is not actual end consumption. Analysts polled by Platts expected stocks to show a decline of 600,000 barrels.
Gasoline output climbed 66,000 b/d to 9.003 million b/d while imports rose 365,000 b/d to 1.17 million b/d. Gasoline demand jumped 194,000 b/d to 9.204 million b/d week-over-week and on a four-week moving average at 9.032 million b/d was 2.2% above year-ago levels.
Given the change in gasoline specifications at this time of year, some of the increase in implied demand could solely represent movement of winter grade gasoline out of primary storage through the distribution system to make way for the lower Reid Vapor Pressure (RVP) gasolines. Basically, RVP is a measure of volatility and evaporation rate; summer months require a lower RVP so gasoline does not evaporate.
While implied gasoline demand appears to have stabilized after radically falling throughout the second half of 2008, distillate demand remains sluggish, reflecting the general economic malaise.
Implied distillate demand dipped 224,000 b/d to 3.764 million b/d week-over-week and on a four-week moving average at 4.057 million b/d was 4.5% below year-ago levels. Both heating oil and diesel stocks increased, leaving distillate inventories 1.7 million barrels higher than the previous week. Analysts expected a draw of 1.5 million barrels.
Distillate production dropped 125,000 b/d to 4.088 million b/d as the NYMEX heating oil crack spread (the price difference between heating oil and crude) fell to a discount to the RBOB crack spread, making gasoline production the more profitable venture.