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Home / News / Today's Headlines / An Analysis of Today's US EIA Oil Stocks Data: US Consumers Spurn Scorching Gasoline Prices

24.07.2008

An Analysis of Today's US EIA Oil Stocks Data: US Consumers Spurn Scorching Gasoline Prices

NEW YORK, NY, July 23, 2008--Platts--US gasoline demand continued to deteriorate, down 2.4% year-over-year on a four-week moving average, as consumers spurn scorching pump prices, according to an analysis published today by Platts regarding the weekly US Energy Information Administration oil stocks data.
Retail gasoline prices eased 4.9 cents to a national average of $4.064 per gallon (/gal) the week of July 21, but year-over-year, pump prices were up $1.1060/gal. Week-over-week implied gasoline demand was essentially unchanged at 9.342 million barrels per day (b/d). But on a four-week moving average, implied gasoline demand had dropped another 0.3 percentage points from the previous week's report.
The drop-off in demand combined with a jump in output--despite unexceptional margins--resulted in a larger-than-expected build of 2.9 million barrels in gasoline stocks. At 217.085 million barrels, gasoline stocks were 12.955 million barrels above the five-year average and 12.951 million barrels above year-ago levels.
But 1.8 million barrels of the gasoline stock build was blending components; finished gasoline stocks were up just 1 million barrels. While implied gasoline demand continued to taper off, distillate demand strengthened despite retail diesel prices that make gasoline look cheap.
Retail diesel prices also fell the week of July 21, but only by 4.6 cents to a national average of $4.7180/gal, $1.829/gal above year-ago levels. While diesel prices have outpaced those for gasoline, some of the implied demand continues to derive from historically high export figures. "With global demand for diesel still strong, US refiners have pushed distillate yields to unprecedented levels knowing the export market will absorb the output," said Linda Rafield, Platts senior oil analyst.
Distillate output edged down 111,000 b/d to 4.625 million b/d from the previous week's record-setting 4.736 million b/d, but yields remained at exceptionally high levels. The distillate yield inched up to an historically high 30.17% as refiners looked to cash in on a $25 per barrel crack spread. The NYMEX heating oil crack has on average been trading at a $22/barrel premium to the RBOB crack spread. High output helped distillate stocks build another 2.4 million barrels to 128.109 million barrels. At 128.109 million barrels, distillate inventories were 4.545 million barrels above the five-year average and 4.456 million barrels above year-ago levels.
"Total refinery yields were an eye-popping 104.55%, suggesting if a refiner can use a heavy sour grade of crude, that's what they are doing to maximize production," said Rafield. And the 104.55% total refining yield occurred with utilization rates falling to just 87.1%, not a typical level during peak driving season.
"The product builds overshadowed the crude stock draw of 1.6 million barrels, but the upshot was a report bearish for crack spreads," Rafield noted.


By Linda Rafield
Platts Senior Oil Analyst

Source: Strategic Industry Communications

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