Crude Oil Inventories Watch: Week Ending 08/13/2010

Inventories

The Department of Energy reported that in the week ending August 13th, 2010, U.S. crude oil decreased by 0.8 million barrels, gasoline inventories were close to unchanged, distillate inventories increased by 1.1 million barrels, and total petroleum inventories increased by 5.3 million barrels. Inventories remain at 10-year highs for the third week, while product inventories remain at record seasonal levels.

Total petroleum inventories surged further into 10-year high territory. The surplus now stands at 87.793 million, or 8.4% above the 5-year average, up from 7.9% in the prior week. Inventories are above the year ago level.

Crude oil inventories decreased more than normal, but remain ahead of the year ago level. The overall surplus to the 5-year average decreased to 26.180 million barrels, or 8.0%, down from 8.5% a week ago.

Product inventories increased, maintaining their record seasonal levels. Distillate inventories continue to approach the absolute all-time highs, with levels about 9 million barrels shy of the 1982 record. Gasoline inventories were flat, bucking the normal seasonal pattern of a significant withdrawal.

Demand

Demand increased 1.3% week-over-week. Over the last four-weeks, total petroleum demand has averaged 3.1% higher than the year ago period. Gasoline demand is up 3.5% YOY and distillate demand is up 5.8% YOY.

Imports

Crude oil imports increased 0.1 million barrels week-over-week. Over the last four weeks, imports have averaged 9.9 million barrels per day, 0.7 million barrels per day higher than the year ago period.

Refinery Activity

Refinery utilization increased notably, reversing some of last week’s sharp drop. Utilization increased to 90% from 88.1% last week, and is near the 5-year average level. Nevertheless, both gasoline and distillate production declined week-over-week.

Miscellaneous

U.S. crude oil production increased 2.2% 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 0.7 million barrels week-over-week. Cushing inventories remain close to the record levels set in May. Prompt month calendar spreads remain extremely well-behaved at -0.39.