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Stock Movements - Sep 09

Source: OPEC_RP090911 9/15/2009, Location: Europe

USA
US commercial oil inventories fell more than 22 mb in August to stand at 1,098 mb but remained almost 80 mb above the five-year average. It is worth noting that the overhang has been shrinking since last March when it reached 114 mb. The draw in inventories in August was the first since September 2008 when stocks fell a minor 1.4 mb after increasing between April and August 2008. Both crude oil and products dropped.

Crude oil stocks followed the seasonal trend and fell almost 9.9 mb, the second largest draw this year after June, to stand at 340 mb. The draw in crude oil stocks did not reflect an increase in demand as refinery throughputs declined again but came as a result of a strong drop in imports, which fell 0.4 mb/d. However, at 340 mb, crude oil inventories remained 32 mb above the five-year average and 38 mb higher than a year earlier.

Product stocks moved against the seasonal trend falling 12.4 mb for the first time in seven months, representing the largest draw since March 2008. Despite the draw, product stocks remained at high levels, well above the upper end of the five-year range. The picture is mixed within products with gasoline declining for the second consecutive month and distillates continuing the upward trend. Gasoline stocks dropped a further 7.8 mb on the back of a modest recovery in demand and production from refineries to stand above 205 mb, keeping the overhang at around 6 mb. In contrast, weak demand let distillate inventories add a further 3.1 mb to reach a new record high of almost 165 mb, the highest since January 1983, resulting in an overhang of 28 mb. Jet fuel oil stocks fell 1.1 mb to 45.5 mb but stayed 4.5 mb higher than a year ago while residual fuel oil inventories remained unchanged at 33.7 mb.

The latest data shows US commercial oil inventories fell 5.1 mb in the week ending 4 September, the fourth draw in a row to stand at 1,096 mb. The draw was attributed to crude oil while products inched up 0.7 mb. Crude oil inventories fell 5.9 mb to stand at 337.5 mb which corresponds to 23 days of forward cover compared to a seasonal average of 20 days.

Driven by sluggish demand, distillate stocks added 2 mb to hit a new record of more than 165 mb, resulting in an immense overhang of 14 days of forward cover. Gasoline stocks, on the other hand, moved against the seasonal trend rising 2.1 mb to 207.2 mb. This build, which put an end to six consecutive weekly draws, was driven by higher imports. Similarly, in terms of forward demand cover, gasoline stocks remained one day higher than the five-year average.

Due to limited capacity, Strategic Petroleum Reserve (SPR) remained unchanged for the third consecutive month at 724.1 mb. This compares to total US SPR capacity of 727 mb.

Western Europe
European (EU-15 plus Norway) total oil inventories rose 5.5 mb in August, compensating for about half of the draw in the previous month, to stand at 1,142 mb, around 13 mb higher than the five-year average and almost 20 mb above last yearís level. Even though the overhang with the five-year average has declined from 38 mb in March, it remained comfortable when considering the slowdown in demand.

The build was attributed to products, particularly to distillates which continued the upward trend, starting in the fourth quarter of the previous year. Product inventories rose 4.8 mb with distillates accounting for 2.6 mb to reach a record high of more than 404 mb. Weak demand let distillate stocks gain 34 mb since last October over a year earlier. However, it is worth noting that despite the upward trend, the overhang has halved to 17 mb at end-August after standing around 35 mb during March through June. The drop in the overhang came as the recent build was lower than the seasonal change as refiners reduced production. In contrast, stronger demand helped gasoline stocks to fall a minor 0.1 mb in August but remained some 10 mb or 9% below the five-year average. Residual fuel oil stocks jumped 2.3 mb, the largest build so far this year, to stand at 114 mb, the highest since the end of the first quarter while naphtha stocks remained unchanged at 27.3 mb, slightly above last yearís level.

On the crude side, inventories failed to follow the seasonal trend, rising 0.7 mb to stay around 480 mb, which is 8 mb or 2% higher than the five-year average but 20 mb or 4% higher than a year earlier. The build in crude oil inventories, which took place despite an increase in refinery runs, was supported by the recovery in North Sea production following annual maintenance and limited opportunities for transatlantic arbitrage.

Japan
Japanís commercial oil stocks rose 5.5 mb in July to offset the draw of the previous month. Despite this build, inventories remained at the lower end of the five-year range. The build was essentially attributed to products, which remained well within the range. Crude oil stocks added a further 1.4 mb to stand at 104 mb, the highest since last February, but remained below the five-year average and last yearís level. The build in crude oil stocks took place despite very low imports to reflect weak demand as refiners cut activities due to sluggish demand for petroleum products, particularly middle distillates.

Product inventories followed the seasonal trend and recovered from a huge decline of 7.4 mb in June. They rose by more than 4 mb and stayed within the five-year range, slightly above the seasonal average. At around 179 mb, product stocks are very comfortable considering sluggish product demand. Almost all components of product stocks increased, particularly distillates, which rose 3 mb to approach 35 mb, the highest level so far this year. Naphtha stocks followed the same trend and gained 2 mb to reach 11 mb, higher than a year ago, whereas residual fuel oil gained 0.2 mb to stand at 15.6 mb, below last yearís level. The exception came from gasoline which continued the downward trend falling 1.0 mb to stand at 13.1 mb, but continuing to hover above the five-year average and last yearís level.

Preliminary data based on weekly changes indicates that Japanís commercial oil inventories continued the upward trend in August, adding almost 4 mb with products continuing to be the main driver, accounting for almost the total build.

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