Analysis of EIA Data
by George Clemen, Industry Analyst
January 16 , 2008 - EIA refining data shows crude oil inputs to crude stills popped up in early January, resulting in a build in gasoline and distillate stocks, followed by a decrease in utilization rates from 91.3 to 87.1 percent this past week. Decreases occurred across all PADDs, so the decrease can be attributed primarily to a drop in demand as opposed to shut downs for maintenance. However, refinery turnarounds (maintenance) usually occur between late January and mid March, so refining rates are likely to decrease a bit more in coming weeks. (What's a PADD?)
Refiners are positioned perfectly going into the winter maintenance period with plenty product in inventory and very soft demand. Crude oil inventories grew by 4.3 million barrels to a total of 287.1 million. Of the 4.3 million, 1.6 million went into the Strategic Petroleum Reserves (SPR). Current refining rates and inventory levels mirror those of winter 2002, when prices were just tipping $28.50 per barrel.
Crude oil imports increased, reflecting the purchase of crude oil for the SPR under the federal program to exchange offshore royalty crude oil sent to US refineries for imported foreign oil purchased by US companies for the SPR.
Finished gasoline and distillate production were lower due to the lower refining rates. And product imports remained very low -- almost all of them coming in through east coast (PADD I) refineries and ports. Despite low operating rates and low imports, refiners managed to build product inventories significantly, indicating a sudden drop in wholesale demand. Total gasoline stocks increased by 2.2 million across the country. More interesting is the build of 6.2 million barrels of gasoline blending components over a 4 week period, of which approximately 85% was RBOB with Alcohol (Reformulated Blendstock for Oxygenate Blending), suggesting an overabundance of this stuff in the supply chain.
Total distillate stocks increased by 1.1 million barrels overall, but PADD V had an extraordinary increase in distillate inventories -- high enough to be unbelievable -- at 15.6 million barrels, where 13 million has historically been the peak operating level. Consumers appear to be rejecting California's high diesel prices.
Finally, note that U.S. crude oil production continues it's slide downward. This month it is 2.2 million barrels per day lower than a year ago, increasing U.S. dependence on foreign oil. And as the old oil fields play out, the balance of the natural gas reinjected in various fields over the years is being produced. Note that natural gas liquids production is up 2.3 million barrels per day from a year ago.
Please visit www.oil-gasoline.com for text with links to graphs . . .
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