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Stock Movements - SEP 11

Source: OPEC_RP110912 9/12/2011, Location: Europe

US
In August, US commercial oil inventories continued to rise, however less than in previous months. US commercial oil inventories rose slightly by 0.3 mb to reach 1188.0 mb, the highest level since November 2011. The build was attributed to products which increased by 2.2 mb, while crude abated the build, declining by 1.9 mb. Despite the increase, total US commercial oil inventories remained at 42.7 mb or 3.8% below a year ago. The surplus with the five-year average remained almost flat from the previous month, at 19.2 mb or 1.8%.

US commercial crude stocks fell in August for the third consecutive month to end the month at 353.1 mb, the lowest level since February 2011. Despite this draw, US commercial crude oil stocks still indicated a surplus of 23.7 mb or 7.2% with the five-year average, but remain slightly lower by 2.3 mb or 0.6% from year-ago stock levels. The draw came mainly from the decline in crude imports which fell by around 263,000 b/d in August, compared with the previous month. At around 9.0 mb/d, US crude oil imports represent a decline of 440,000 b/d compared to the same period last year. Higher crude refinery runs also contributed to the fall in crude oil stocks.

Indeed, US crude oil refinery inputs averaged 15.5 mb/d in August, 70,000 b/d less than previous month. Refineries operated at 89.4% of their operable capacity, around 0.4 percentage points higher than in the previous month. It should be noted that during the week ending 26 August, US crude oil stocks climbed by over 5 mb to reach 357.1 mb, driven by lower runs, which dipped by 225,000 b/d and stronger crude oil imports reaching 9.6 mb/d, more than 800,000 b/d over last week. The other release of 4.8 mb also helped the build in US crude commercial stocks. However, one week later, US crude stocks reversed the build and declined sharply by 4.0 mb as refining runs remained strong as refiners tried to capture the healthy margins at the end of the driving season. Additionally, weather disturbances contributed to lower crude imports which fell significantly by more than 1 mb/d to just 8.6 mb/d. Adding to the bullish pressure, Cushing stocks fell still further, to just 32.7 mb, the lowest level since last November. Due to the IEA coordinated release of strategic reserve, US SPR declined by almost 23 mb to end the month of August at 696.9 mb.

On the product side, product stocks continued to climb, increasing by 2.2 mb to end the month at 734.9 mb, the highest level since the end of the last year. The continued build in US product stocks reflects lower demand as the US economic recovery fades. Despite this build, US product inventories remained at 40.5 mb or 5.2% below a year ago and 4.5 mb or 0.6% below than the five-year average.

Within products, the picture was mixed. Distilates and residual oil stocks rose by 4.5 mb and 1.4 mb respectively, while gasoline and jet fuel oil inventories fell by 6.4 mb and 1.1 mb respectively. At 208.8 mb, gasoline stocks stood at 12 mb or 3.3% below a year ago at the msame period, while they represent a surplus of 3.3 mb or 1.6% with the five-year average. The effect of the slightly higher gasoline demand impacted inventories, despite increasing gasoline output. US gasoline demand averaged 9.1 mb/d in August, but almost 300,000 b/d less than a year ago at the same time, a sign that this year the US summer driving season missed its peak. Jet fuel stocks also fell by 1.1 mb to end the month at 43.9 mb, 3.2 mb lower than last year over the same period, but they are 1.0 mb or 2.3% above the historical trend.

Distillate stocks saw an increase of 4.5 mb follwing a 8.6 mb build in the previous month, ending the month at 156.8 mb, the highest since last January. At this level, distillate stocks stood at 13.6 mb or 8.0% below a year ago, while they remained at 6.5 mb or 4.3% above the seasonal trend. This build in distillate stocks could be attributed to the decline of about 290,000 b/d in distillate demand reflecting disapointed industrial activity in the US. Strong distillate production in preparation of the winter season also contributed to the build in distillate inventories. In coming weeks, heating oil should be getting more attention, however in light of adequate supply, a bearish distillates market should contribute to limiting the increase in the crude oil price. Residual fuel stocks also increased by 1.4 mb to end the month at 37.6 mb, standing at 2.9% below a year ago, indicating a slight deficit of 0.5% with the seasonal norm.

Japan
In July, commercial oil stocks in Japan rose by 1.7 mb after two consecutive months of decline. At 177.6 mb, Japanese commercial oil stocks stood slightly below the yearago level and remained 8.5 mb or 4.6% below the five-year average. The stock build was divided between crude and products, which rose by 1.1 mb and 0.7 mb respectively.

Japanese commercial crude oil stocks reversed the draw observed last month and rose by 1.1 mb to end the month at 104.4 mb. Despite this build, crude commercial oil stocks in Japan remained at 1.6 mb or 5.2% below year-ago levels, and 5.2 mb and 4.7% below the five-year average. The build in crude commercial oil stocks in July came from higher crude oil imports, which increased by almost 0.5 mb/d over the previous month to reach 3.51 mb/d. However, crude oil imports were still 1.9% less than year-ago levels. Japanese refiners are facing plant outages after the earthquake has reduced import volumes. Although Japanís total crude oil imports declined in July versus a year ago, the countryís imports of direct-burning crude continued to increase to make up for a short-fall in nuclear output. The build in crude oil stocks came despite higher refinery utilization rates, which reached 72.2%, 6.8 percentage points (pp) above the previous monthís level, but 2.2 pp less than a year ago. This corresponds to a crude throughput of 3.34 mb/d, around 310 tb/d or 10.3% higher than in the previous month.

Total product inventories also saw a build in July, reversing two consecutive months of decline to stand at 73.2 mb. This stock build left total products in July at a surplus of 1.3 mb or 1.8% compared with a year ago. However, they remained 3.3 mb or 4.4% below the five-year average. The build in Japanese total products in July could be attributed to the increase in refinery output, which increased by 9.3%, averaging 3.16 mb/d. The month of July marked the start of Japanís peak summer oil demand season, which lasts until September. However, the build in oil product stocks came despite higher domestic sales. They increased by 7.5%, averaging 3.15 mb/d.

Japanís total oil products sales in July were still 0.6% below year-ago levels, reflecting the economic disruption caused by the earthquake. With the exception of residual fuel, all products saw a build with the bulk of the gain from distillate stocks, which rose by 1.1 mb. At 33.2 mb, distillate stocks stood 3.4 mb, or 11.1% above year-ago levels, while remaining 0.7 mb or 2.1 % below the five-year average. Within the components of distillates, jet fuel and gasoil stocks fell 7.9% and 2.5% respectively, while kerosene rose by 13%. The build in kerosene stocks was driven by higher output as inventories increased by almost 34%. The drop in jet fuel stocks reflects higher exports, by around 36%, outpacing the increase in output. Healthy domestic sales, which increased by 3.0%, were behind the drop in gasoil inventories.

Gasoline stocks rose slightly by 0.1 mb to end the month at 12.7 mb and remained 11.2% above year ago levels and 3.6% higher than the seasonal norm. This build came on the back of higher output, up by 11.3% and came despite improvements in gasoline sales. In contrast to the build in other products, residual fuel oil stocks fell by 0.6 mb for the third consecutive month. At 16.3 mb, residual fuel oil stocks stood at 5.5% above year-ago levels and 9.4% less than the five-year average. Fuel oil A inventories saw a drop of 10.3%, while fuel oil B.C experienced a build of 2.2%. The build in fuel oil B.C came on the back of higher production, up by 20.9% versus the previous month and 10% above last yearís levels. This build came despite the increase in sales of B.C type fuel oil, used mainly for power generation. The drop in fuel oil A inventories came on the back of an improvement in domestic sales, which increased by almost 26%. Naphtha stocks remained virtually at the same level as in the previous month, standing at 10.9 mb, 23% below year-ago mlevels.

Singapore and Amsterdam-Rotterdam-Antwerp (ARA)
At the end of July, products stocks in Singapore reversed the upward trend seen last month and declined by 1.1 mb to 43.6 mb. With this draw, products stocks remained at 3.3 mb or 7.1% below year ago levels for the same period. Within products, the picture was mixed. Fuel oil and light distillates both saw a build of around 0.4 mb, while middle distillates stocks fell by 1.9 mb. At 13.9 mb, middle distillates have experienced a stock draw for two consecutive months, and stood at 1.6 mb or 10.5% below year ago levels for the same period. Middle distillates stocks have declined due to high seasonal demand, especially from Indonesia.

Diesel imports from Pertamina are estimated to reach 4.4 mb in July, up from only 2.5-3.0 mb in the previous month. Jet fuel imports in Indonesia also increased to average 0.6 mb. Arbitrage shipments to Europe and South America are also contributing to draws in middle distillates stocks from the region. Light distillate stocks rose to nearly 10.0 mb, but were still 0.3 mb or 2.6% below year ago levels. This build is mainly due to higher imports from India and UAE. However, light distillate stocks may fall in the coming month due to expected higher demand from Indonesia. Fuel oil stocks climbed after two consecutive weeks of decline to end the month at 19.75 mb. Higher Western inflows have contributed to the increasing stocks.

Product stocks in ARA in July fell by 3.2 mb, reversing last monthís stock build. At 33.1 mb, ARA stocks stood at 3.9 mb or 10.7% below last year levels for the same period. Within products, the picture was mixed; both fuel oil and jet fuel stocks saw a build of 0.3 mb, while gasoline, Naphtha and gasoil dropped by 0.3 mb, 0.5 mb and 3.0 mb. At 17.8 mb, gasoil stocks stood at 1.1 mb or 5.9% below year-ago levels. The fall in gasoil stocks was driven by higher diesel demand from agriculture sector leading to higher exports. Gasoline fell slightly to 5.7 mb, mainly due to higher exports outpacing imports from France, Norway, Russia and the UK. Gasoline stocks remained at 1.3 mb less than year ago levels for the same period. Fuel oil rose to end the month at 5.6 mb, boosted by the imports from France and Russia. Jet fuel stocks rose also, to finish the month at 3.7 mb, but still remained 2.8 mb below a year ago. This build was supported by higher imports from the Middle East and South Korea.

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