Crude Oil Inventories Watch: Week Ending 08/27/2010

Inventories

The Department of Energy reported that in the week ending August 27th, 2010, U.S. crude oil increased by 3.4 million barrels, gasoline inventories decreased by 0.2 million barrels, distillate inventories decreased by 0.7 million barrels, and total petroleum inventories increased by 4.0 million barrels.

Total petroleum inventories moved further into multi-decade high territory. The surplus now stands at 105.395 million, or 10.2% above the 5-year average, up from 9.2% in the prior week.

Crude oil inventories increased counter-seasonally. The overall surplus to the 5-year average increased to 37.209 million barrels, or 11.5%, up from 9.4% a week ago.

Product inventories finally declined, but remain at record seasonal levels. Gasoline inventories are now 27.901, or 14.1% above the 5-year average and distillate inventories are 34.873, or 24.8% above the 5-year average.

Demand

Demand increased 0.6% week-over-week. Over the last four-weeks, total petroleum demand has averaged 1.4% higher than the year ago period. Gasoline demand is up 1.9% YOY and distillate demand is up 7.8% YOY.

Imports

Crude oil imports decreased 0.2 million barrels week-over-week. Over the last four weeks, imports have averaged 9.6 million barrels per day, 0.5 million barrels per day higher than the year ago period.

Refinery Activity

Refinery utilization decreased to 87% from 87.7% in the prior week. Gasoline production fell nearly 0.3 million barrels per day, but is coming off record levels. Distillate production also declined.

Miscellaneous

U.S. crude oil production increased 1.7% from last week. Year-to-date oil output is up 3.8% from the year ago period. Production is now at the highest level since April 2004.

Inventories at the NYMEX delivery point, Cushing, Oklahoma decreased 0.5 million barrels week-over-week. Prompt month calendar spreads continue to widen on surging overall inventory levels and are now up to -1.41 from -0.74 last week.