DOE Update: Distillate Inventories Approach All-Time Highs

Includes: TSO, USO, VLO, XLE, XOM
by: Sumit Roy


The Department of Energy reported that in the week ending August 6th, 2010, U.S. crude oil decreased by 3.0 million barrels, gasoline inventories increased by 0.4 million barrels, distillate inventories increased by 3.5 million barrels, and total petroleum inventories increased by 0.1 million barrels. Inventories remain at 10-year highs, while product inventories maintain record seasonal levels.

Crude oil prices were down about $1.39 before the release of the DOE report, and remain down following the release.

Total petroleum inventories increased counter seasonally. The surplus now stands at 82.595 million, or 7.9% above the 5-year average, up from 7.7% in the prior week. Total petroleum inventories remain at 10-year highs and above the year ago level.

Crude oil inventories decreased more than normal, but remain slightly ahead of the year ago level. The overall surplus to the 5-year average decreased to 27.816 million barrels, or 8.5%, down from 9.1% a week ago.

Product inventories continue their relentless march higher, with both gasoline and distillate inventories at record seasonal levels. Distillate inventories are now approaching the absolute all-time highs, with levels about 10 million barrels shy of the 1982 record.


Demand increased 0.7% week-over-week. Year-over-year distillate demand growth has weakened significantly in recent weeks. YOY growth is running in the low-single digits versus double digits in May and June. Over the last four-weeks, total petroleum demand has averaged 3.1% higher than the year ago period. Gasoline demand is up 3.3% YOY and distillate demand is up 3.6% YOY.


Crude oil imports decreased 0.2 million barrels week-over-week. Over the last four weeks, imports have averaged 10.1 million barrels per day, 0.5 million barrels per day higher than the year ago period.

Refinery Activity

Refinery utilization decreased sharply, dipping to 88.1% from 91.2%. Both gasoline and distillate production ticked lower.


U.S. crude oil production decreased 3.7% from last week. Year-to-date oil output is up 3.6% from the year ago period.

Inventories at the NYMEX delivery point, Cushing, Oklahoma decreased 0.1 million barrels week-over-week. Cushing inventories are 167,000 barrels below the record levels set in May. Prompt month calendar spreads remain well-behaved at -0.47.

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