Analysis of U.S. EIA data: U.S. refined product stocks plunged 8.7 million barrels last week


New York - November 6, 2013


U.S. refined product stocks sank a cumulative 8.7 million barrels during the reporting week ended November 1 on a jump in demand for gasoline and distillate fuels, Energy Information Administration (EIA) data showed Wednesday.


Domestic gasoline stocks fell 3.8 million barrels to 210 million barrels the week ended November 1. The draw far exceeds analysts’ expectations of a 1 million-barrel decline.


Based on the EIA data, gasoline stocks are at a 2.83% surplus to the five-year average. That's down from a 4.64% surplus the week ended October 25 and a 7.6% surplus in late September.


Gasoline stocks declined as implied demand* for the fuel jumped 238,000 barrels per day (b/d) to 9.3 million b/d the week ended November 1, putting it about 434,000 b/d above the five-year average. A year ago, gasoline demand was at 8.31 million b/d.


Oil Market Analyst Torbjorn Kjus of DNB Bank contends that the "fairly large" U.S. refinery throughput number at 15.1 million b/d, "which is the basis for the calculated demand number, is more a reflection of the large exports of refined products -- caused by both cheap feedstock now spreading to the U.S. Gulf of Mexico and less expensive fuel to run the refineries -- rather than strong demand."


Kjus added that total U.S. product demand at 20.22 million b/d the week ended November 1, up 87,000 b/d from the week prior, will likely be revised lower when the EIA monthly oil data is released, as has been the case for the past four months.


At the same time, production of finished gasoline dropped by 1.1 million b/d to 8.4 million b/d the week ended November 1.


Oil Outlooks President Carl Larry had anticipated a drop in gasoline production, while exports were expected to pick up.


The more definitive EIA monthly data showed that gasoline exports were at 380,000 b/d in August, up from 373,000 b/d in July.


The most significant draw in gasoline stocks was on the U.S. Atlantic Coast (USAC) -- home to the New York Harbor-delivered New York Mercantile Exchange (NYMEX) RBOB contract -- where stocks declined 2.1 million barrels. Refiners there are operating at 69.4% of capacity, down 4.1 percentage points from the week ended October 25.


In the U.S. Gulf Coast (USGC) and U.S. Midwest regions the week ended November 1, gasoline stocks fell 1.8 million barrels and 800,000 barrels, respectively.


DISTILLATE STOCKS SINK, CRUDE OIL UP LESS THAN EXPECTED


U.S. distillate stocks fell 4.9 million barrels the week ended November 1 to 117.8 million barrels as implied demand surged 356,000 b/d to 4.51 million b/d.


Analysts polled by Platts were expecting a 1.5 million-barrel decline in stocks.


Stocks fell the most on the USGC, which was down 2.1 million barrels the week ended November 1. Stocks dropped 1.3 million barrels and 1.5 million barrels on the USAC and in the Midwest, respectively.


EIA estimated that U.S. distillate exports were at 1.35 million b/d the week ended November 1, compared to 1.01 million b/d in the same reporting week in 2012. In its August monthly report, EIA showed distillate exports were at 1.3 million b/d, down from a record 1.38 million b/d in July.


Distillate production rose a marginal 5,000 b/d to 4.94 million b/d the week ended November 1. The figure is well above production from a year earlier, which was at 4.56 million b/d.


U.S. crude oil stocks rose 1.6 million barrels to 385.4 million barrels the week ended November 1, less than analysts’ expectations of a 2.5 million-barrel build. Stocks were 11.6% above the five-year average.


Production of crude oil in the lower-48 states was steady at 7.36 million b/d. Despite no week-over-week change, production is well above the 6.13 million b/d seen at the same time last year.


U.S. refinery utilization rates fell 0.5 percentage point to 86.8% of capacity, which was in line with analysts’ expectations.


Midwest crude oil stocks rose 2.7 million barrels the week ended November 1. In that region, a crude oil distillation unit at Citgo's 180,000 b/d Lemont, Illinois, refinery remained down as of Tuesday, according to sources. The unit was shut October 23 after a fire damaged the crude distillation unit, and the company said it will reopen later this week.


At the NYMEX delivery hub at Cushing, Oklahoma, crude oil stocks rose 1 million barrels to 36.5 million barrels. That's the fourth consecutive week of builds at Cushing; still, stocks there are about 22.5% below the five-year average.


The build in the Midwest was partly offset by a 2.5 million-barrel decline in crude oil stocks in the USGC. Refiners in the USGC bumped up run rates to 86.3% of capacity, from 86% of capacity the week ended October 25.


Crude oil imports fell 235,000 b/d to 7.22 million b/d, led by a 584,000 b/d decline in imports from Saudi Arabia to 793,000 b/d.


Canadian crude oil imports fell 165,000 b/d to 2.28 million b/d, and Mexican imports declined 145,000 b/d to 880,000 b/d.


Implied demand* is the amount of product that moves through the U.S. distribution system, not actual end consumption.


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