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Analysis of US EIA data: US Atlantic Coast oil product stocks still tight after Hurricane Sandy


New York - November 15, 2012


U.S. distillate and gasoline stocks declined for the reporting period that ended November 9, particularly in the U.S. Atlantic Coast (USAC) as refinery runs remain short of seasonal norms in the aftermath of Hurricane Sandy, U.S. Energy Information Administration (EIA) data released Thursday showed.


The shortfalls in USAC product supplies come despite the restart of five of the seven affected USAC refineries, as well as the restart of the Colonial Pipeline's 700,000 barrel-per-day (b/d) Line 3, which feeds the massive Linden, New Jersey, terminal farm, and the 500,000 b/d Buckeye pipeline, which supplies New York Harbor.


The sharp declines in USAC product stocks are likely a result of increased demand and still-lagging refinery runs.


While the EIA does not release weekly demand figures by region, total U.S. *implied demand for distillates rose 517,000 b/d to 4.106 million b/d. Demand for gasoline rose 601,000 b/d to 8.908 million b/d.


USAC refinery utilization increased 7.9 percentage points to 66.4% of capacity, but remains well short of pre-Hurricane levels, which were closer to 80%. Last year around this time, USAC refinery utilization was higher, but so was total operable capacity.


Total U.S. refinery utilization increased 0.6 percentage points to 86% of capacity, exactly in line with analysts' expectations.


Potentially impacting USAC product stocks was the closure of Hess' 70,000 b/d Port Reading, New Jersey, refinery on Thursday, November 8. The refinery had been brought back online after the Hurricane, but lost power Thursday afternoon as part of a broader power outage in the area.


Phillips 66 said November 5 that its 238,000 b/d Bayway refinery will be back to normal operations in two to three weeks. Bayway is a major supplier of both ultra low sulfur diesel (ULSD) and gasoline to the New York region.


Total U.S. distillate stocks fell 2.539 million barrels to 115.517 million barrels, pushed lower in part by a sharp 2.209-million-barrel decline in USAC stocks, which fell to 36.079 million barrels.


USAC ULSD stocks fell 1.716 million barrels to 16.221 million barrels, and higher-sulfur heating oil stocks fell 584,000 barrels to 19.123 million barrels, pushing the deficit to the EIA five-year average to 48.41%. The regional decline includes a sharp 702,000-barrel decline in Central Atlantic stocks -- the region's largest demand center for heating oil -- which fell to 12.070 million barrels.


Analysts polled Monday by Platts expected total U.S. distillate stocks to decline 500,000 barrels.


But the U.S. Midwest saw a larger decline in distillate stocks, which fell 3.243 million barrels to 25.756 million barrels. This decline was due to a 2.962 million barrel decline in ULSD stocks, which fell to 23.726 million barrels.


U.S. Gulf Coast distillate stocks, however, increased 2.646 million barrels to 37.460 million barrels. Gulf Coast ULSD stocks rose 1.667 million barrels to 27.207 million barrels.


USAC GASOLINE STOCKS DROP


Meanwhile, U.S. gasoline stocks fell 440,000 barrels to 201.937 million barrels last week, led by a sharp reduction in USAC stocks, which fell 1.536 million barrels to 45.107 million barrels. USAC gasoline stocks fell to 11.85% below the EIA five-year average.


Analysts polled expect U.S. gasoline stocks to remain flat.


A 1.070-million-barrel decline in U.S. Midwest gasoline stocks, which fell to 44.549 million barrels, was offset partially by a 922,000-barrel increase in US Gulf Coast gasoline stocks, which rose to 76.017 million barrels. West Coast gasoline stocks rose 1.205 million barrels to 29.929 million barrels.


In crude, U.S. commercial stock rose 1.089 million barrels to 375.936 million barrels, led by a 1.274 million-barrel increase in USAC stocks, which rose to 11.362 million barrels. USAC crude imports fell 340,000 b/d to 726,000 b/d.


Gulf Coast stocks fell 1.606 million barrels to 182.333 million barrels. Midwest stocks rose 967,000 barrels to 107.255 million barrels, as stocks at New York Mercantile Exchange crude oil future contract delivery hub in Cushing, Oklahoma, rose 715,000 barrels to 43.681 million barrels.


Analysts polled Monday by Platts expected stocks to grow 1.5 million barrels.


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