Analysis of US EIA data: US crude oil stocks increase 1.994 million barrels last week

New York - September 12, 2012

U.S. commercial crude oil stocks rose 1.994 million barrels to 359.092 million barrels for the reporting week ended September 7, according to data released Wednesday by the U.S. Energy Information Administration (EIA).

Analysts polled by Platts Tuesday expected U.S. crude stocks would decline by 3.25 million barrels during the reporting period.

EIA reports only a slight increase in Lower 48 crude oil production, up 8,000 barrels per day (b/d) to 5.062 million b/d, as the U.S. Bureau of Safety and Environmental Enforcement announced that 36.35.%, or about 501,683 b/d, of the U.S. Gulf of Mexico oil production remained shut-in as of September 7 due to Hurricane Isaac.

However, the build during the week that ended September 7 includes a 1-million-barrel crude oil loan to refiner Marathon Petroleum on August 31 from the U.S. Strategic Petroleum Reserve, according to EIA Analyst James Beck, after the refiner faced difficulties sourcing crude oil in the aftermath of Hurricane Isaac.

Backing out the Marathon loan, U.S. crude stocks remain amply supplied at 358.092 million barrels, and are just over 8% above the EIA five-year average.

The rest of the build last week was likely a product of higher U.S. crude oil imports, which rebounded, rising 530,000 b/d to 8.565 million b/d, and a 235,000 b/d decline in gross inputs to U.S. refineries, which fell to 14.594 million b/d, reflecting the fact that as of last week, Gulf Coast refineries were still not back to pre-storm operation levels.

Three of six refineries that were shut before the Hurricane Isaac returned to service ahead of the reporting period, totaling 514,700 b/d in capacity, according to EOXLive Analyst Tom Pawlicki. The remaining 632,000 b/d restarted in the middle of the reporting week, he added.

Gulf Coast crude stocks increased 548,000 barrels to 174.857 million barrels, according to data from the American Petroleum Institute, as imports rose 821,000 b/d to 4.453 million b/d. Gulf Coast refinery runs were still down, with gross inputs to Gulf Coast refineries down 225,000 b/d to 6.949 million b/d. Gulf Coast refinery utilization, accordingly, fell 2.6 percentage points to 79.6% of capacity.

Crude Imports from Saudi Arabia jumped 729,000 b/d to 1.469 million b/d, up from an unusually low 740,000 b/d the week ending August 31, when loadings were disrupted by Hurricane Isaac. While the EIA does not break down its weekly country of origin imports by region of entry, the bulk of Saudi crude is imported into the Gulf Coast.

Even prior to the hurricane disruptions, imports of Saudi crude into the U.S. had slipped as extra supplies bound for Motiva's 600,000 b/d Port Arthur, Texas, were put on hold. Saudi imports had climbed as high as 1.916 million b/d in March in preparation for a new 325,000 b/d crude unit at the refinery, which is co-owned by Saudi Refining and Shell. By late June, Shell said the unit could be down for several months because of corrosion problems.

Midwest crude stocks increased 519,000 barrels to 104.033 million barrels, despite a 828,000 barrel-decline in Cushing, Oklahoma stocks which fell to 44.087 million barrels. Cushing is the delivery point for the New York Mercantile Exchange (NYMEX) crude oil futures contract.

U.S. gasoline stocks fell 1.177 million barrels to 197.716 million barrels, led by a 1.393 million barrel decline in Gulf Coast gasoline stocks, which fell to 65.104 million barrels. The draw increased the deficit to the EIA’s five-year average to 3.2%.

Analysts polled by Platts Monday expected U.S. gasoline stocks to decline by 2.3 million barrels.

A 229,000 barrel increase in Atlantic Coast stocks, which rose to 50.071 million barrels, has helped to ease tightness in the region. At 6.92% below the five-year average, the deficit has declined week-on-week from 8.34% for the reporting week ending August 31. The deficit has been nearly halved from 12.09% below the five-year average for the reporting week ending August 10.

U.S. distillate stocks rose 1.476 million barrels to 128.552 million barrels over the reporting period, led by a 838,000-barrel increase in Atlantic Coast distillates, which rose to 43.905 million barrels.

The rise was counter to a 1.5 million barrel decline expected by analysts.

U.S. ultra low sulfur diesel (USLD) stocks also rose, up 2.035 million barrels to 94.273 million barrels, led by a 968,000 barrel increase in Midwest ULSD stocks, which rose to 29.114 million barrels, highest since the reporting week ending April 13.

Atlantic Coast heating oil stocks rose 847,000 barrels to 22.335 million barrels, led by a 1.164 million barrel increase in Central Atlantic heating oil stocks, which rose to 15.390 million barrels.

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

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