Petroleum inventories recorded huge increase last week, indicating persistence of gloomy demand/supply conditions in the sector. According to the US Energy Department, crude inventory rose +2.86 mmb, compared with market expectation of a -1.45 mmb draw, to 335.6 mmb in the week ended September 18. Cushing stock also added +0.5 mmb. We believe the surge was driven by decline in refinery runs and rise in imports.
Fuel stockpiles soared with gasoline inventory surging +5.41 mmb to 213.1 mmb. This was the second largest increase so far in 2009. Distillate stockpile gained for the 5th consecutive week and the increase has shown signs of acceleration. Current storage of 170.8 mmb is the highest level not seen since last 1982. While there are still 2 months until we enter the traditional heating season, we are not optimistic that the inventories can be wiped out efficiently. One thing is that meteorologists forecast that winter this year in the Northern hemisphere will be less cold than normal. Another thing is energy demand has been weak throughout the year and the recovery will continue to be slow despite gradual improvement in economic conditions.
WTI crude oil dived after the report. The benchmark contract plunged to 68.5 as the data revealed the bearish nature of the energy market. RBOB gasoline dropped to 16.92, the lowest level in 2 months while heating oil erased yesterday’s gain.
US Oil Inventory
| Weekly change in inventory as of 18/09/09 | Actual | Change | Market Expectation | Previous |
| Crude oil | 335.6 mmb | +2.86 mmb | -1.45 mmb | -4.73 mmb |
| Gasoline | 213.1 mmb | +5.41 mmb | +0.50mmb | +0.55 mmb |
| Distillate | 170.8 mmb | +2.96 mmb | +1.45 mmb | +2.24 mmb |
Comparison between API and EIA reports:
API (Sep 18) | EIA (Sep 18) | |||||
Actual | Inventory | Previous | Forecast (using API’s inventory level) | Inventory | ||
Crude oil | +0.28 mmb | 337.2 mmb | +0.63 mmb | +4.25 mmb | 337 mmb | |
Gasoline | +3.82 mmb | 212.6 mmb | +1.35 mmb | +4.90 mmb | 213 mmb | |
Distillate | -1.88 mmb | 168.4 mmb | +5.20 mmb | +0.21 mmb | 168 mmb |
API collects stockpile information on a voluntary basis from operators of refineries, bulk terminals and pipelines.
The government requires that reports be filed with the Energy Department (EIA)for its weekly survey. Oil inventories from the API and EIA moved in the same direction for over 70% of the time, using data in the past 4 years.
Source: Bloomberg, API, EIA
