A Glut of Petroleum Products

This week's inventory data from the Department of Energy [DOE] shows that while crude oil inventories showed a larger than expected decline, supplies of gasoline and distillate fuels are now above average.  In January, inventories of distillates were well below average, causing fears that we would have shortages this winter. 

Six months later, we're now looking at a situation where distillate inventories have risen for 11 straight weeks, causing supplies to rise to their highest levels of the year.

click to enlarge

Comments

[Poltrader:]

I doubt this is a permanent demand destruction. It's a readjustment through a squeeze of the discretionary part of a largely non-discretionary demand for fuel.

2008 Jul 23 07:30 PM

[take a guess:]

The comparison in absolute quantity v.s. 20+ year average is misleading. It doesn't take into account the increase in consumption rate over the average.

2008 Jul 23 08:00 PM

[Sophisse:]

To summarize your numbers:
- distillate inventory is ~9m bpd over average (about 7%)
- gasoline inventory is ~6m bpd over agerage (about 3%)
- crude inventory is ~35m bpd below average (about 12%)

2008 Jul 23 08:23 PM

[starkoski:]

What are you guys somking? The crude oil inventories and at record levels below average. Hey put down that hookah and rethink the numbers so you don't get laughed off the court. CERA likes you.

2008 Jul 23 09:18 PM

[dieuwer:]

You know that these numbers are modeled, right? No one actually measured the inventories.

2008 Jul 23 09:36 PM

[ICouldBeWrong:]

dieuwer: No I didn't know that. What makes you say that? Any links?

2008 Jul 24 12:51 AM

[maximax:]

i didn't know that either, and I don't think it is correct, see bottom of tonto.eia.doe.gov/dnav... . So stocks seem to be based on compulsory surveys with a response rate of 98-100%. Now that still leaves the possibility that these respondents themselves model rather than measure the stocks, but that is unlikely, as it is simply easier for a refinery/port/etc to read their meters rather than devise a model. dieuwer, if you have any other serious info, please provide.

2008 Jul 24 04:56 AM

[The Hammer:]

It is scary that crude oil inventories are so low. This could cause a problem down the road.
Heard that demand was at jan 2007 levels. Does not sound so gloomy for oil bulls.
Unemployment is picking up, gas at $4 a gal and still fairly strong demand.
Demand may have softened in the US but I would expect demand to continue to grow in emerging markets, maybe not at a blistering pace but nonetheless demand growth.
Can the demand there make up for the lack of growth demand here?

2008 Jul 24 12:09 PM

[NOWHEREMAN:]

To my knowledge, the only country in the world that still uses gasoline is the United States.

The Heating Oil Contract includes Jet Fuel and diesel.

The demand for diesel is worldwide and increasing. Whether for agriculture or constuction or transportation either land or maritime, diesel is the primary driver. There are diesel shortages all over the world. Gasoline demand destruction means diddly.

2008 Jul 24 11:15 PM