Crude Oil Inventories Watch: Week Ending 09/03/2010

Inventories

The Department of Energy reported that in the week ending September 3rd, 2010, U.S. crude oil inventories decreased by 1.9 million barrels, gasoline inventories decreased by 0.2 million barrels, distillate inventories decreased by 0.4 million barrels, and total petroleum inventories increased by 0.2 million barrels.

Total petroleum inventories stalled at multi-decade highs in the latest week, but the surplus to the 5-year average grew substantially as stocks were nearly flat, while a significant withdrawal is typical at this time of year.. The surplus now stands at 110.252 million, or 10.7% above the 5-year average, up from 10.2% in the prior week.

Crude oil inventories decreased, but by less than is typical seasonally. The overall surplus to the 5-year average increased to 40.998 million barrels, or 12.9%, up from 11.5% a week ago.

Product inventories continued to decrease, but not fast enough. In fact, the gasoline surplus increased to 28.269, or 14.4% above the 5-year average. The distillate surplus did decrease, however, to 33.271, or 23.5% above the 5-year average.

Demand

Demand increased 0.6% week-over-week, but year-over-year growth has been slowing a bit in recent weeks. Over the last four-weeks, total petroleum demand has averaged 0.7% higher than the year ago period. Gasoline demand is up 1.1% YOY and distillate demand is up 9.4% YOY.

Imports

Crude oil imports plunged 1.9 million barrels week-over-week. Over the last four weeks, imports have averaged 9.5 million barrels per day, 0.5 million barrels per day higher than the year ago period.

Refinery Activity

Refinery utilization increased counter-seasonally to 88.2% from 87% in the prior week. Gasoline production increased almost 150K barrels per day, while distillate production held steady.

Miscellaneous

U.S. crude oil production was steady at six-year highs last week. Year-to-date oil output is up 3.8% from the year ago period.

Inventories at the NYMEX delivery point, Cushing, Oklahoma decreased 0.2 million barrels week-over-week.