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Stock Movements - Jan 13

Source: OPEC_RP130111 1/16/2013, Location: Europe

OECD
Preliminary data for November shows that total OECD commercial oil stocks fell seasonally by 15.3 mb to stand at 2706 mb. Despite the fall in total stocks, inventories showed a surplus of 33.6 mb over a year ago and a gain of 16.0 mb compared to the five-year average. The total stock-draw came from products as they declined by 16.0 mb with crude showing a small build of 0.7 mb. Within the components, crude stocks stood at comfortable levels, indicating a surplus of 51.0 mb with last year and nearly 48.7 mb with the seasonal norm. However, products remained tight showing a deficit of 28.8 mb with the previous year and 32.7 mb with the seasonal norm. On a regional basis, North America’s stocks declined in November by 8.8 mb, with crude and products falling by 3.7 mb and 5.1 mb, respectively. The fall in US commercial crude stocks in November reflected a higher refinery utilization rate combined with lower crude imports, averaging less than 8.0 mb/d. At 690 mb, North America’s commercial crude oil stocks stood at comfortable levels, denoting a surplus with the five-year average of 65.6 mb, as well as being 51.0 mb more than a year ago. However, product stocks remained 8.1 mb below the historical average and 15.5 mb less than a year ago. Middle distillates accounted for the bulk of the deficit, indicating 32 mb below the seasonal norm, while gasoline stocks started to improve, showing a surplus of 6.0 mb with the five-year average.

OECD Europe’s inventories saw a build of 4.2 mb in November, reversing the fall of the last two months, driven mainly by the build of 8.1 mb in crude, as products abated this build and declined by 3.9 mb. Despite this total stock build, the region’s commercial stocks remained at 44 mb below the five-year average and stood 9.7 mb below year ago at the same time. Both crude and products showed a deficit with the five-year average at 19.0 mb and 27 mb, respectively. Product stocks stood at 15.0 mb below a year earlier, while crude stocks indicated a surplus of 5.3 mb with the previous year. In November, total commercial oil stocks in OECD Pacific declined by 10.7 mb after remaining almost unchanged in October and ending the month at 417 mb. Despite this stock draw, the region’s commercial stocks stood at 2.6 mb above the last five-year average and were 7.7 mb higher than at the same time a year ago. Both crude and product stocks went down in November by 3.7 mb and 7.0 mb, respectively. Within the components, commercial crude stood 2.1 mb above the historical average and 6.1 mb higher than over the same period a year ago. Product stocks in the OECD Pacific at the end of November showed a slight surplus of 0.5 mb with the five-year average and 1.7 mb with a year earlier. In terms of days of forward cover, OECD commercial stocks in October stood at nearly 58 days, a loss of one day compared to the previous month, but they displayed a gain of nearly two days over the last five-year average and a gain of around one day over the average a year ago at the same time.

Europe
The latest available data for December shows that European stocks reversed the build of the previous month and fell by 12.6 mb to stand at 1,065.0 mb. At this level, they ended the month 4.2 mb, or 0.4%, below a year ago at the same time and were 63.2 mb, or 5.7%, below the five-year average. Most of the stock draw came from crude which declined by 11.1 mb, while products decreased only by 1.5 mb. European crude inventories fell by 11.1 mb in December, reversing the build of 8.1 mb of the previous month, and finished at 451.7 mb, an eight-month low. At this level, they were 26.0 mb, or 5.4%, above a year earlier, although still 13.0 mb, or 2.9%, below the last five-year average. A higher increase in demand from refiners, averaging 10.5 mb/d, almost 90,000 b/d above the November level, was behind the draw in European crude stocks. Average refinery utilization edged above 82% of capacity but was well down on the summer peak of 87%.

Product stocks in Europe fell by 1.5 mb after the fourth consecutive month of a build and ended December at 600.6 mb, leaving them at 34.0 mb, or 5.4%, below the same period last year and showing a deficit of 50.7 mb, or 7.8%, with the five-year average. Within products, and with the exception of middle distillates which remained unchanged, all components experienced draws. Gasoline stocks saw a slight fall of 0.1 mb to end the month of December at 105.2 mb and were 4.9 mb, or 4.4%, less than a year ago and 15.6 mb, or 12.9%, below the seasonal average. The drop in gasoline stocks reflects mainly higher exports to the US to temporarily replace the output lost from US East Coast refineries as demand in Europe continued to remain weak. Fuel oil stocks were lower by 0.6 mb, ending the month of December at 91.7 mb, which was 4.1 mb below the same period last year and 16.3 mb lower than the five-year average. Higher exports to Singapore have led to the stock draw in residual fuels. Middle distillates remained unchanged in December to stand at 373.5 mb. At this level, they are 4.1 mb, or 4.3%, below a year ago and 16.2 mb, or 4.2%, below the seasonal average. Higher demand in the Mediterranean region was offset by higher distillate production.

US
US total commercial oil stocks fell in December by 3.0 mb following a strong drop of 22 mb in November to stand at 1,089.5 mb. Despite this stock draw, they were 35.4 mb, or 3.4%, above the same period a year ago and 54.7 mb, or 5.3%, higher than the fiveyear average. The fall was attributed to crude, which declined by 11.8 mb, while products abated this stock draw, increasing by 8.8 mb. In December, US commercial crude stocks declined by 11.8 mb for the second consecutive month to stand at 359.9 mb. Despite this draw, crude commercial oil stocks remained at comfortable levels, indicating a surplus of 29.3 mb, or 8.8%, with a year ago and 40 mb, or 12.5%, with the five-year average. It should be noted that the bulk of the stock-draw in crude occurred during the week ending 28 December when crude oil fell by 11.1 mb from the previous week, reflecting refiners optimizing tax liabilities on their inventory positions.

On a monthly basis, the fall in US crude stocks came about from higher crude oil refinery inputs which rose by nearly 400,000 b/d to 15.4 mb/d, much higher than at the same time last year, indicating growth of 750,000 b/d. In December, US refineries operated at around 90.6%, which was 2.4 percentage points (pp) above November and 5.8 pp higher than the same month last year. In December US crude imports averaged nearly 8.0 mb/d, almost unchanged from a month earlier but lower than the level of December 2011, when imports reached 8.4 mb/d. In contrast, with the draw on total crude commercial stocks, inventories in Cushing showed a further increase of more than 4.0 mb, reaching a new record high of nearly 50.0 mb. However, stock levels in Cushing could drop in coming weeks following the new pipeline expansion due to the startup of the 400,000 b/d Seaway line.

In contrast to the stock draw in crude, product inventories rose by 8.8 mb in December after four consecutive months of stock draws. At 729.6 mb, the deficit incurred last month switched to a surplus of 6.1 mb, or 0.8%, from a year ago and now stand higher by 14.7 mb or 2.1%, compared to the seasonal average. Within products, the picture was mixed. Distillates and gasoline saw builds, while residual fuel, jet fuel stocks and other unfinished products witnessed declines. Gasoline stocks continued their build of four consecutive months, increasing by 13.6 mb to end December at 225.7 mb, the highest level since March. With this build, they are now at 2.5 mb, or 1.1%, above a year ago and 14.7 mb, or 2.1%, higher than the seasonal average. The drop of about 100,000 b/d in demand to average 8.5 mb/d was behind the stock-draw in gasoline. Higher gasoline output, reaching almost 9.1 mb/d, also contributed to the build in gasoline stocks. Distillate stocks reversed the fall of the last two months and increased by 8.9 mb to end the month of December at 124.0 mb.

Despite this build, distillates remained at 25.2 mb, or 16.9%, below the year-ago level and 28.0 mb, or 18.4%, lower than the seasonal norm. Lower demand in December was behind the drop in distillate stocks. Indeed, apparent demand for distillates fell by around 250,000 b/d from November and from the level of the same period last year. Higher output supported the build of distillate stocks. In December, distillate production averaged 4.9 mb/d, around 200,000 b/d more than a month earlier, but slightly below a year ago at the same time. The continued strength of distillate exports limited the further build in distillate stocks. Jet fuel stocks fell for the second consecutive month, by 1.0 mb. At 39.2 mb, they were 2.3 mb, or 5.5%, lower than a year ago, showing a deficit of 1.9 mb, or 4.7%, with the seasonal norm. Residual oil stocks also declined by 2.0 mb in December to finish the month at 36.4 mb. At this level, they were 2.2 mb, or 6.5%, higher than the same month a year ago, but they are still 1.2 mb, or 3.1%, below the latest five-year average.

Japan
In November, total commercial oil stocks in Japan reversed the build of the last two months and declined by 10.7 mb to stand at 172.3 mb, the lowest level since the end of March 2012. With this stock draw, they switched the surplus of the previous month to a deficit of 2.3% with a year ago, and they are 7.8 mb, or 4.4%, below the five-year average. Both crude and product stocks went down by 3.7 mb and 7.0 mb, respectively.

Japanese commercial crude oil stocks fell by 3.7 mb for the second consecutive month and ended November at 98.9 mb. At this level, they stood at 0.5 mb above a year ago at the same time, while they remained 0.5 mb below the seasonal average. The stock-draw in crude came as crude throughput rose by 106,000 b/d, or 3.4%, from a month earlier. However, at 3.2 mb/d Japanese crude oil runs were 5.0% less than a year ago at the same time. Japanese’s refiners were running at 71.8%, 2.4 pp higher than in the previous month but 3.5 pp below the same period last year. Direct crude burning in power plants in November fell by 16.2% to end the month at around 203,000 b/d, and they indicated a decline of 16.3% compared to the same period last year. In November, Japanese crude oil imports stood at 3.3 mb, unchanged from the previous month, but were 7.6% less than a year ago at the same period.

Japan’s total product inventories reversed their upward trend of seven consecutive months and declined in November by 7.0 mb. At 733 mb, Japanese product stocks stood at 4.5 mb, or 5.8%, below a year ago at the same period and 7.3 mb, or 9.1%, less than the five-year average. The stock draw in total products came as total oil product sales in November rose by 8.5% from a month earlier to reach 3.5 mb/d. At this level, they are 2.0% higher than a year earlier. The increase in oil product sales was supported by firm fuel oil demand combined with higher kerosene consumption driven by colder-than-normal weather. All products experienced a stock draw with the bulk coming from distillate fuel. Indeed, distillate stocks fell by 3.1 mb to end the month of November at 34.4 mb and they are at 3.8 mb, or 9.9%, below a year ago and 4.1 mb, or 10.6%, less than the seasonal average. Within distillate components, kerosene and gasoil oil stocks went down by 14.6% and 0.5%, respectively, while jet oil fuel stocks rose by 1.2%.

The strong fall in kerosene stocks is attributed to very high consumption with almost double from last month, due to colder weather. Gasoline stocks fell by 1.3 mb to end the month at 12.7 mb, representing a slight deficit of 0.1 mb, or 1.1%, and they are 0.5 mb, or 3.5%, less than the five-year average. The drop in gasoline stocks could be attributed mainly to the decline in imports and production as domestic sales saw an increase. Residual fuel oil stocks fell by 1.7 mb to stand at 15.5 mb leaving them at 0.7 mb, or 4.5%, below a year ago and 1.9 mb, or 11.2%, lower than the five-year average. Within the components of fuel oil, fuel oil A fell by 9.5%, while fuel oil B.C stocks fell less by 1.4%. Higher domestic sales by almost 24% were behind the decline in fuel oil A inventories. Naphtha inventories saw a stock draw of 1.0 mb, ending November at 10.7 mb. Despite this drop, they remained 0.2 mb, or 1.7%, higher than a year ago, but remained 0.8 mb, or 7.2%, lower than the five year average. The fall in naphtha stocks came from lower imports which declined by 15.5%.

Singapore and Amsterdam-Rotterdam-Antwerp (ARA)
At the end of November, product stocks in Singapore rose by 1.2 mb for the third consecutive month and ended the month at 42.7 mb, the highest level since August 2011. At this level, they were at 3.4 mb, or 8.6%, above a year ago at the same time. Within products, fuel oil saw the bulk of the build increasing by 1.7 mb, followed by a 0.4 mb build in light distillate stocks, while middle distillates declined by 1.0 mb. Light distillate stocks rose to 9.6 mb at the end of November but remained 2.6 mb, or 21.3%, below the same period last year. Despite the slight build, light distillate stocks, which comprise mainly gasoline, remained low driven by the decline of imports in South Korea.

Stocks may draw down further in the coming weeks on the back of refinery maintenance in Indonesia’s largest plants. Residual fuel oil climbed to 22.7 mb, nearly an eight-month high, representing a surplus of 5.0 mb, or 28.5%, with the same period last year. This stock build is mainly due to weak Asian bunker limiting exports. At the same time, Asian fuel oil markets are currently in a steepening contango, which is encouraging stock building. Middle distillate stocks fell in November to stand at 10.4 mb but still represented a surplus of 1.0 mb, or 10.2%, with a year ago at the same period. Stocks of middle distillates are expected to fall further in December on ongoing refinery maintenance in Indonesia and expected reduction in imports from North Asia.

Products stocks in Amsterdam-Rotterdam-Antwerp (ARA) fell by 1.9 mb in November for the third consecutive month and ended the month at 27.3 mb. At this level, they stood at 3.5 mb, or 11.3%, below last year at the same time. Within products, the picture was mixed, fuel oil, gasoil and gasoline saw a drop, while naphtha and jet fuel oil increased. Fuel oil stocks fell by 1.6 mb, reversing the build of last month, and ended the month of November at 5.0 mb. At this level, they are in line with last year at the same period. The fall in fuel oil stocks reflected lower arrivals to the ARA hub. Gasoil stocks also fell by 0.8 mb to stand at 13.7 mb, the lowest level since the end of November 2008, when demand was down sharply in the midst of the financial crisis. At this level, they represent a deficit of 2.2 mb, or 13.9%, below a year ago at the same period. Naphtha and jet fuel oil stocks rose both by 0.3 mb to stand at 1.3 mb and 2.3 mb, respectively. Naphtha stocks stood at 0.2 mb, or 20%, above last year at the same time, while jet fuel oil stocks indicated a deficit of 1.2 mb, or 33.6%, with a year ago at the same time. Meanwhile, gasoline stocks saw a minor decline and ended the month of November at 5.1 mb, almost the same level as November 2011. The stock draw was driven by higher exports outpacing the arrivals in ARA.

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