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Stock Movements - Nov 12

Source: OPEC_RP121111 11/10/2012, Location: Europe

OECD
Preliminary data for September shows that total OECD commercial oil stocks remained almost unchanged following a 11.2 mb drop in August. Crude oil shows a build of 1.1 mb, while products abated this build as they declined by 1.7 mb. At 2704 mb, OECD commercial stocks stood at 34 mb above the level of last year at the same period and indicated a surplus of 6 mb compared to the last five-year average, making this the first gain since the month of May. Within the components of OECD commercial inventories, crude stood at a comfortable level representing a surplus of 44 mb with a year earlier and 32 mb above the five-year average, while product stocks indicated a deficit of 10 mb with the last year and 26 mb with the seasonal norm. The upward trend in total OECD commercial stocks observed since the beginning of this year reflects the strong performance of non-OPEC supply and the increase in OPEC crude production amid relatively weaker demand. Indeed, during the first three quarters of this year, global supply increased by 2.6 mb/d, while world oil demand has increased by only 0.7 mb/d.

On a regional basis, North America stocks declined by 3.5 mb, with crude rising by 2.2 mb, while products abated this build declining by 5.7 mb. The build in US crude commercial stocks came from lower refinery runs reflecting the period of refinery maintenance normal for this time of year. In September, US refineries operated at 87.3%, which was 2.7 percentage points (pp) lower than in the previous month and 0.4 pp below the same month last year. At 661 mb, North America commercial crude oil stocks stood at comfortable levels, indicating a surplus with the last five year average at 36 mb, 28 mb more than a year ago at the same time. However, product stocks in North America still remained 13 mb below the historical average in September and 19 mb lower y-o-y. The biggest factor in keeping product stocks low in US refineries is higher product exports. In fact, through the first nine months of this year, US exports reached more than 3.0 mb/d, 9% above the same time last year and around nearly 1 mb/d over two years ago.

OECD Europeís inventories saw a decline of 2.0 mb, driven mainly by the fall of 3.9 mb, in crude, while products rose by 1.9 mb. With this total drop, OECD Europe commercial stocks remained at 23.2 mb below the five-year average divided between crude and products as they indicated a deficit of 13.0 mb and 10.1 mb, respectively. However, year-on-year, OECD Europe commercial stocks indicated a gain of 13 mb for the first time since October 2010. Both crude and products contributed to this gain as they showed a surplus of 5.7 mb and 6.8 mb respectively. OECD Pacific commercial stocks rose in September by 4.9 mb, driven by the increase of 2.8 mb in crude and 2.1 mb in products. OECD Pacific commercial stocks stood at 6.4 mb above the last five-year average and 13.1 mb above the same time a year ago.

However, within the components, the picture is mixed. OECD Pacific commercial crude stood at 9.2 mb above the historical norm, while products indicated a deficit of 2.8 mb. Compared with a year ago at the same period, crude showed a surplus of 10.7 mb, and products witnessed a gain of 2.3 mb. In terms of days of forward cover, OECD commercial stocks in September, stood at 58.9 days and indicated a gain of nearly 2 days compared to the last five-year average and one day compared to the previous year at the same period. This comfortable level of OECD days of forward cover is not expected to fall, since demand in OECD countries is projected to decline further in the coming year amid continued good performance of non-OPEC supply. Indeed, OECD demand for next year is expected to fall by 200,000 b/d vis-ŗ-vis this year, while non OPEC is forecast to increase by around 0.9 mb/d.

Europe-16
The latest available data for September shows that European stocks reversed the build of the last two months and fell by 2.0 mb to stand at 1,063 mb. At this level, they ended the month 11.1 mb or 1.0% lower than a year ago and 47 mb or 4.3% below the five year average. The draw in total inventories came from crude, which fell by 3.9 mb, while product stocks rose by 1.9 mb. European crude inventories fell by 3.9 mb in September reversing the build of last month and finished the month at 456.8 mb. Despite this decline, they remained 14.7 mb or 3.3% above a year earlier, but persisted 4.8 mb or 1.0% below the last five-year average. The drop in crude stocks was attributed to limited supply due to offshore maintenance in the North Sea. Higher refinery runs also contributed to the fall in crude oil stocks. Indeed, European crude throughputs were above 11.0 mb in September, around 480,000 b/d more than in the previous year at the same period. The third quarter averaged 11.17 mb/d, the highest in two years, and corresponds to almost 85% of capacity.

Product stocks reversed the draw of last month and increased by 1.9 mb to end the month of September at 606.0 mb. At this level, product stocks in Europe were 26.0 mb or 4.1% below the same period last year and 43.0 mb or 6.6% lower than the five-year average. Within products, distillates and naphtha saw a drop, while gasoline and residual fuel oil witnessed a build. Gasoline saw the bulk of this build, increasing by 1.9 mb to stand at 106.9 mb, albeit showing a slight deficit of 1.9 mb compared to a year ago at the same period and remained 8.0 mb or 7% below the seasonal average. Weak demand in European countries was behind this build. However, higher gasoline exports to the US following a fire in the larger Venezuelan refinery combined with the shutdowns at US refineries after Hurricane Isaac has limited the build in gasoline stocks. Distillate stocks ended September slightly lower than the previous month, following the 1.5 mb build in August. At 373.1 mb, they dropped by 16.1 mb or 4.1% from a year earlier, and stand 20 mb or 5.1% lower than the five-year average. Higher distillates consumption in September, especially for heating oil, when German demand showed some strength has pushed inventories lower. However, the jump in refinery runs has further limited the fall in distillate stocks. Fuel oil stocks rose by 1.3 mb to end the month of September at 91.7 mb, 7.3 mb below the same period last year and 18.0 mb lower than the five-year average. This stock-draw was driven by weaker demand in the region combined with higher exports to the US and Singapore.

US
Preliminary weekly data showed that US total commercial oil stocks fell in October for the third consecutive month by 3.2 mb to stand at 1,098.3 mb/d. Despite this stock draw, they stood at 24.4 mb or 2.3% above a year ago at the same period and 35.1 mb or 3.3% higher than last five year average. The fall in US total commercial oil stocks was attributed to products as they decreased by 11.6 mb, while crude oil stocks abated this declined as they increased by 8.4 mb.

In October, US commercial crude stocks rose by 8.4 mb for the second consecutive month to stand at 373.1 mb. With this build, they indicated a surplus with a year ago of 34.5 mb or 10.2% and they are at 41.7 mb or 12.6% above the five-year average. However, it should be noted that during the week ending 26 October, US commercial crude oil fell by 2.0 mb reflecting the weekly drop in imports of around 900 tb/d to 7.9 mb/d. On monthly basis, the US crude imports averaged 8.3 mb/d in October, almost 600,000 b/d less than the same period last year. The monthly build in crude stocks came despite the increase in crude oil refinery inputs by nearly 120,000 b/d to average 14.8 mb/d. The level of US crude runs was also higher than the same period a year ago, by more than 300,000 b/d. In October, US refineries operated at 87.3%, which was almost the same level as the previous month, but 1.0 percentage points (pp) below the same month last year. In contrast with the build in total crude commercial stocks, inventories in Cushing showed a decline of about 0.5 mb to stand at 43.4 mb, as volumes continue to flow south on the Seaway pipeline, but despite this fall, crude oil stocks at Cushing remained some 35% above the same period last year.

Product inventories fell substantially by 11.6 mb in October for the third consecutive months. At 725.2 mb, they remained 10.1 mb or 1.4% below last yearís level and 6.6 mb or 0.9% lower than the five-year average. Within products, the picture was mixed; distillates and other unfinished products saw declines, while gasoline, residual fuel oil and jet fuel oil experienced builds. Gasoline stocks reversed the fall of the last two months and increased by 3.6 mb to end October at 199.5 mb. At this level, inventories were 8.9 mb or 4.3% below those of a year ago and 5.1 mb or 2.5% below the historical average. The increase in gasoline imports by around 100,000 b/d was behind the build in total gasoline stocks.

However, the hurricane Sandy at the heart of PADD1, the largest gasoline market in the US will add the uncertainty to that regionís short term gasoline market; which was already tight on gasoline before the storm. Distillate stocks fell by 6.1 mb for the second consecutive months and ending October at 117.9 mb. With this draw, they were now 24.9 mb or 17.5 %, below the year-ago level and 29.6 mb or 20.1% lower than the seasonal norm. Lower distillate production averaged 3.7 mb/d, around 130,000 b/d less than the previous month supported the stock-draw in distillates. The continued strength of distillate exports also contributed to the draw on distillate stocks. Apparent demand for distillate remained almost at the same level as previous month averaging 3.7 mb/d, but the demand will depressed in PADD1 region as power outages and obstructed roadways will reduce economic activities. Jet fuel stocks rose for the fourth month running, by 0.1 mb from a month ago. At 44.5 mb, they stood at the highest level since one year. But despite this upward trend, they are still 1.1 mb or 2.4% lower than a year ago. However, they indicate a surplus of 1.8 mb or 4.2 with the seasonal norm. Residual oil stocks rose by 1.0 mb in October to finish the month at 36.1 mb. At this level, they were 0.7 mb or 1.8% lower than the same month a year ago and 2.1 mb or 5.5% below the latest five-year average.

Japan
In September, commercial oil stocks in Japan reversed the draw incurred over the last month, increasing by 4.9 mb to end the month at 181.3 mb, the highest level since February 2009. With this build, the surplus with a year ago has increased to 1.4% from only 0.1% a month earlier. This build also helped to switch the deficit with five-year average occurred last two months to a surplus of 2.1% in September. The total stockbuild came from crude and products as they increased by 2.7 mb and 2.1 mb respectively.

Japanese commercial crude oil stocks rose by 2.7 mb reversing the draw of last three consecutive months and ended September at 104.1 mb. At this level, they were 4.3 mb above the same time a year ago and around 8.4 mb above the latest five-year average. The build was due mainly to lower crude throughput, which declined by around 187,000 b/d or 5.4% over the previous month to average 3.3 mb/d, and stood at 2.8% below the year-ago level. In September, Japanís refineries were running at 72.7%, which was 4.2 percentage points (pp) lower than in the previous month, but 0.1 pp higher than in the same period last year. It should be noted that direct crude burning in power plants in September fell slightly by 3.3% to end the month at around 248,700 b/d, but they still indicate a huge increase of 43.9% when compared to the same period last year. Relatively lower crude imports in September have limited the build in Japanese crude oil stocks. Indeed, crude oil imports fell by 0.5% from the previous month averaging 3.6 mb/d and were 0.4% less than the same period last year.

Japanís total product inventories continued their upward trend, rising by 2.1 mb for the sixth consecutive month to end September at 77.2 mb, the highest level since November 2011. Despite this build, they showed a deficit of 1.7 mb or 2.2% with a year ago and were 4.7 mb or 5.7% below the seasonal average. This stock-build for total products came mainly from lower total oil product sales, which decreased by nearly 200,000 b/d or 5.8% from the previous month, but they still remained 1.6% higher when compared to the same period last year. At 3.2 mb/d, oil product sales in Japan were higher for the 10th month a row y-o-y when demand was low after the triple disaster devastated Japan in March. Lower refinery throughput has limited the build in roduct stocks.

Within products, all the products saw a builds with the bulk coming from distillates as they increased by 1.4 mb finishing the month of September at 35.9 mb, the highest level since November 2011. Despite this build, they still showed a deficit of 1.9 mb or 5.0%, compared with a year ago, and were 3.2 mb or 8.3% below the five-year average. Within distillate components, jet fuel and gasoil saw a draw, while kerosene witnessed builds. Kerosene stocks rose by 11.6 % reflecting lower domestic sales due to unusually hot weather in September. Jet fuel inventories fell by 12.2%, driven by an increase of 12.4% in domestic consumption combined with 11.3% increase in exports. Gasoil stocks also fell by 6.9%, supported by a huge decline of almost 40% in imports.

Lower output which decreased by 13% contributed also to the fall in gasoil stocks. Gasoline stocks rose slightly by 0.2 mb, reversing the drop of the previous month. At 14.1 mb, gasoline stocks were 1.2 mb or 8.9% higher than a year ago, representing a surplus of 1.4 mb or 11.5% with the seasonal average. The build in gasoline stocks could be attributed mainly to lower domestic sales which decreased by 12.6%. Residual fuel oil stocks rose slightly in September ending the month at 17.3 mb. At this level, they were 0.2 mb or 1.1% less than the same period a year ago and 1.1 mb or 6.0% below the five-year average. Within the components of fuel oil, fuel oil A rose by 8.3%, while fuel oil B.C stocks saw a decline of 5.6%. Lower production was behind the draw in fuel oil B.C inventories, while the decline in domestic sales was behind the increase in fuel oil A stocks. Naphtha inventories saw an increase of 0.5 mb, ending September at 10.0 mb. At this level, they remained 0.8 mb or 7.6% below a year ago and 1.8 mb or 15.0% lower than the five-year average. The build in naphtha stocks came from lower domestic sales, combined with higher imports.

Singapore and Amsterdam-Rotterdam-Antwerp (ARA)
At the end of September, product stocks in Singapore reversed the fall of last two months and increased by 1.9 mb to end the month at 37.5 mb. Despite this build, they remained below the level of the same time a year ago, showing a deficit of 4.9 mb or 11.5%. Within products, middle distillate stocks saw a drop, while light distillates and fuel oil stocks experienced a build. Middle distillate stocks fell slightly by 0.2 mb reversing the build of the last two months and ended the month of September at 9.2 mb. At this level, they were 4.5 mb or 33% below the same time last year. This build was due mainly to higher imports from Australia which was countered by global weak demand. Increasing imports from South Korea also supported the build of middle distillates. Light distillate stocks ended September by 1.5 mb higher than in the previous month, following two consecutive months of a draw. At 10.2 mb, light distillate stocks stood at 0.5 mb or 4.7 mb higher than a year ago at the same period. The build in light distillate stocks came from lower demand in the region. Stocks are expected to increase further following the restart of the 100,000-b/d Royal Dutch Shell refinery in Singapore after aperiod of maintenance. Fuel oil stocks also saw an increase of 0.5 mb after two consecutive months of a draw, and ended September at 18.2 mb. Despite this build, they are still 0.8 mb or 4.3% below the same period a year ago.

Products stocks in ARA fell by 2.3 mb in September after three consecutive months of builds and ended the month at 29.4 mb, the lowest level since December and 0.8 mb or 2.7% below a year earlier at the same time. Within products, with the expectation of gasoline, all other products witnessed a draw with the bulk of the fall coming from gasoil. Indeed, gasoil stocks fell 1.8 mb to finish the month of September at 16.0 mb, the lowest level since end of last year. At this level, they were 0.5 mb or 31% lower than a year ago at the same period. Higher exports, outpacing imports, were behind this stock draw. At the same time, the backwardation structure of the Gasoil forward curve did not encourage an increase in stocks. Fuel oil stocks fell for the third consecutive month by 0.7 mb to stand at 4.0 mb, representing a deficit of 1.1 mb or 21% with a year ago. The drop was mainly driven by a very large VLCC loading for departure to Singapore. Jet fuel inventories reversed the build incurred during the last three months and dropped by 0.1 mb to end September at 3.0 mb, representing a decline of 0.1 mb or 4.2.0% from the same period last year.

Naphtha also saw a decline of 0.3 mb to stand at 0.9 mb, up 0.1 mb or 11.8% year-onyear. This draw came of back of higher demand from the petrochemical industry, which offset imports from Russia and Spain. Gasoline was the only product to show a build of 0.2 mb in September. At 5.5 mb, they stood at 0.8 mb or 18.2% above the same time a year ago. However, gasoline inventories in ARA are expected to fall in coming weeks, reflecting seasonal refinery maintenance, which will lead to a decline in gasoline production.

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