DOE Crude Oil Inventory Update

Includes: OIH, OIL, OILC, USO
by: Sumit Roy

The government reported that for the week ending June 18, 2010, crude oil inventories rose 2 million barrels, gasoline inventories fell 0.8 million barrels, distillate inventories rose 0.3 million barrels, and total petroleum inventories rose 2.7 million barrels.

The report had no immediate impact on oil prices; prior to the release, crude was already lower on the back of sinking equity markets and bearish API survey data.

Taking a closer look at the numbers, total petroleum inventories are tracking closely with year ago levels. The surplus versus the 5-year average is now 66.327 million barrels, or 6.4%, down from 6.6% a week ago. Crude oil inventories, on the other hand, have been building counter-seasonally for the last two weeks, sending the surplus versus the 5-year average to 29.378 million barrels, or 8.8%, the highest such surplus since October of 2009.

Both gasoline and distillate inventories remain above normal, with the latter still at historic highs. Gasoline inventories are 7.811 million barrels, or 3.7% above the 5-year average, while distillate inventories are 30.634, or 24.3% above the 5-year average.

On the demand side, over the last four-week period, total petroleum consumption has averaged 19.6 million barrels per day, which is up 6.9% from the year ago period. Over the same period, gasoline demand averaged 9.2 million barrels per day, up 0.8% year-over-year, while distillate demand averaged 3.9 million barrels per day, up 12.8%.

Crude oil imports are running ahead of the year ago level; over the last four weeks, imports have averaged 9.7 million barrels per day, up 0.477 million barrels per day year-over-year. Product imports are running close to the levels of a year ago.

Oil inventories at Cushing, Oklahoma, the NYMEX delivery point, fell 0.8 million barrels. Calendar spreads at the front of the futures curve have tightened significantly since Cushing inventories peaked under 38 million barrels a few weeks ago. Aug/Sep is currently about -0.70, while Sep/Oct is -0.60. The prompt month spread peaked at -4.60 a little over a month ago.

U.S. crude oil production was flat compared to a week ago, but up 4.6% from the year ago level. Year-to-date, production is up 3.5% from the comparable period a year ago. Output levels will be closely watched to see whether the situation in the Gulf of Mexico is having any impact.

Disclosure: No Positions