US commercial oil stocks, which represent total crude and petroleum products excluding the Strategic Petroleum Reserve (SPR), moved up slightly, adding 0.70 mb or about 0.03 mb/d to stand at 1,005.60 mb during the period 30 September-28 October 2005. The significant build in crude oil inventories was mostly balanced by draws on distillate and Other Oil stocks. This small gain moved the y-o-y surplus up to 4% from the 3% registered in the previous period, while the five-year average excess widened to 3% or 1%
higher than in the previous month.
Crude oil stocks regained the previous month’s losses, increasing by 13.7 mb or 0.49 mb/d to 319.1 mb on the back of recovering production after shut-downs of crude oil facilities due to hurricanes. US crude oil production rose by 0.26 mb/d to 4.07 mb/d in October. Crude oil imports also contributed to the strong build in crude oil inventories, rising by 1.94 mb/d to stand at 10.06 mb/d. Some of the increases in production and imports have been absorbed by refineries which accelerated refinery runs to 82.49% or 12.70% higher than the level registered in the previous period. Crude oil forward cover improved by 2.3 days to 24.5 days or 5 days above last year and the five-year average. The y-o-y surplus hovered around 10%, while the five-year average excess widened to 9% from the 7% registered last month.
On the product side, distillates showed the most significant change among the main refined product inventories, decreasing by 7.1 mb or 0.25 mb/d to stand at 120.9 mb. Both components of distillates — heating oil and diesel — contributed to this draw, declining by 3.53 mb to 57.57 mb and by 3.57 mb to 66.89 mb respectively. Higher implied demand, which rose by 0.04 mb/d to 4.07 mb/d, was the main reason behind the strong draw on distillates. Increasing distillate output due to improved refinery runs and a stable level of distillate imports which remained above 3 mb/d prevented distillate inventories from falling further. Distillate forward cover plunged below 30 days from the 32.7 days registered last month to stand at 29.9 days. The y-o-y surplus stood at 5% while last report’s five-year average surplus turned into a deficit of 2%. Gasoline inventories improved a slight 1.4 mb or 0.05 mb/d to stand at 196.9 mb mainly due to recovering production which rose by 1.22 mb/d to stand at 8.73 mb/d. Part of the rise in gasoline output served higher implied demand which showed an increase of 0.21 mb/d to 9.05 b/d. Gasoline forward cover remained mostly at the previous month’s level of 22 days. The y-o-y shortage remained at 2% while a slight build left gasoline inventories in line with the five-year average.
During the same period, the SPR fell by 8.1 mb or 0.29 mb/d to stand at 685.2 mb. This draw is part of the 30 mb which the IEA decided to release from the SPR in September to counter any draw-downs on stocks due to hurricane disruption. The SPR is projected to show further draws in the coming months until all crude oil production facilities resume full operations. In the week ending 4 November, total US commercial oil stocks continued to show builds, rising by 11.55 mb to stand at 1,017.15 mb compared to the previous week. Most of the build occurred in crude oil and gasoline inventories which rose by 4.42 mb to 323.56 mb and by 4.22 mb to 201.13 mb respectively. Distillate inventories displayed a minor draw of 0.08 mb to stand at 120.85 mb.
Western Europe
Total oil stocks in Eur-16 (EU plus Norway) during October kept the upward trend for the fourth consecutive month, rising by 3.6 mb or 0.12 mb/d to stand at 1147.7 mb, the highest level in six years. This build left the y-o-y surplus at 5% from the 3% registered in the last report. Most main product inventories with the exception of fuel oil contributed to this increase.
Crude oil inventories lost part of the previous month’s gain, declining by 2.9 mb or 0.09 mb/d to stand at 486.6 mb. It was mainly slower exports to the US market which kept crude oil inventories high in Eur-16, as some US refineries were still struggling to cope with the massive damages caused by the hurricanes. High refinery runs were also behind such draw as European refineries maintained high runs to benefit from the relatively high refining margins. Despite this draw, the y-o-y surplus remained at the previous month’s level of 5%.
Main product inventories, especially distillates and gasoline, showed increases with the first rising by 5 mb or 0.16 mb/d to 382.9 mb while the latter moved up a slight 1 mb or 0.03 mb/d to 141.8 mb. These increases came on the back of closed transatlantic arbitrage due to very high freight rates, especially for clean tankers, because of tight tonnage supply. Mild weather pressed the consumption of middle distillates especially for heating fuel oil, while the ending of the holiday season slowed gasoline consumption in Eur-16. A moderate build in distillate
stocks moved the y-o-y surplus from 3% to 6%, while for gasoline it remained at the previous month’s level of 5%.
Japan
Total oil inventories in Japan showed little change during September, remaining close to the previous month’s level of 191 mb. A moderate draw on crude oil stocks was balanced by an almost equal build in products, especially middle distillates. However, the y-o-y surplus narrowed to 4% from 13% in the previous month. Crude oil inventories showed a moderate draw of 5 mb or 0.17 mb/d to stand at 112.5 mb which was exactly the same level as that registered a year ago. Lower imports were the main reason behind the draw while lower refinery runs prevented further losses. Gasoline inventories added a slight volume, increasing by 0.3 mb to 12.6 mb on the back of slower implied demand and relatively higher production. Despite this small build, the previous month’s surplus of 7% turned into a deficit of about 2%. Middle distillates performed better than gasoline, adding 5.1 mb or 0.17 mb to stand at 45.4 mb which was 14% higher than the level observed in the previous month. Residual fuel oil stocks did not show major changes, declining a slight 0.4 mb to stand at 20.5 mb, about 12% higher than the level seen last year.
