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55 comments on It's Time for Summer Gasoline

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Leanan on April 16, 2008 - 10:52am Permalink | Subthread | Comments top

Summary of Weekly Petroleum Data for the Week Ending April 11, 2008

U.S. crude oil refinery inputs averaged 14.2 million barrels per day during the week ending April 11, down 113,000 barrels per day from the previous week's average. Refineries operated at 81.4 percent of their operable capacity last week. Gasoline production moved lower compared to the previous week,averaging 8.8 million barrels per day. Distillate fuel production rose slightly last week, averaging 4.0 million barrels per day.

U.S. crude oil imports averaged nearly 8.9 million barrels per day last week, down 33 thousand barrels per day from the previous week. Over the last four weeks, crude oil imports have averaged more than 9.2 million barrels per day, about 1.0 million barrels per day below the same four-week period last year. Total motor gasoline imports (including both finished gasoline and gasoline blending components) last week averaged 950,000 barrels per day. Distillate fuel imports averaged 260,000 barrels per day last week.

U.S. commercial crude oil inventories (excluding those in the Strategic Petroleum Reserve) decreased by 2.3 million barrels from the previous week. At 313.7 million barrels, U.S. crude oil inventories are in the lower half of the average range for this time of year. Total motor gasoline inventories decreased by 5.5 million barrels last week, and are above the upper limit of the average range. Both finished gasoline inventories and gasoline blending components inventories decreased last week. Distillate fuel inventories increased by 0.1 million barrels, and are in the lower half of the average range for this time of year. Propane/propylene inventories increased by 0.1 million barrels last week. Total commercial petroleum inventories decreased by 8.0 million barrels last week, and are in the lower half of the average range for this time of year.

And here's what they were expecting:

The U.S. Energy Information Administration was expected to report that crude inventories grew 1.5 million barrels last week, according to a survey of analysts by Platts, the energy research arm of McGraw-Hill Cos.

Gasoline inventories were expected to decline 2 million barrels, to post their fifth consecutive weekly drop amid increasing demand for the fuel, the survey showed.

"Implied gasoline demand typically starts to increase at this time of year, but high prices at the pump and a slowing U.S. economy appear to have dented the pace of demand growth," the Platts report said.

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Robert Rapier on April 16, 2008 - 12:59pm Permalink | Subthread | Parent | Comments top

The analysts at Platts are missing a major piece. It isn't that demand is necessarily increasing, but supply is definitely falling due to poor margins. And it has further to fall before things get interesting. If gasoline inventories continue to fall at this pace, then in May gasoline prices will start to make up some ground they lost when they failed to keep pace with oil prices.

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MadMaster on April 16, 2008 - 6:44pm Permalink | Subthread | Parent | Comments top

Total commercial petroleum inventories decreased by 8.0 million barrels last week, and are in the lower half of the average range for this time of year.

This is what's disturbing. There was a total ~8 million barrel drop last week too. This totals 16 million barrels in two weeks. I haven't heard anything that could cause this (other than companies not doing refining). But if refineries aren't doing their refining, shouldn't crude stocks build??

I'm expecting another drop next week because of multiple supply disruptions this week... (hence I voted for $127 before $103)

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neuroil on April 17, 2008 - 6:53am Permalink | Subthread | Parent | Comments top

Well ... crude stocks don't build because imports are way down. If this is because of voluntary restraint on buying this would mean in turn, if americans don't buy, the market elsewhere should be oversupplied, ie, stocks elsewhere should sore. Perhaps this is the case in China who have a project to build a SPR. It also seems, as the IEA said, that OECD stocks are less tight than last years. But still, the increasint price indicates that there are buyers at higher prices so even with america buying less, people are competing for what is produced.

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westexas on April 17, 2008 - 8:55am Permalink | Subthread | Parent | Comments top

My point is that refiners aren't going to let the inventory levels drop below minimum levels, and given what I believe is happening--importers bidding for declining net oil exports--refiners are caught between having to pay high prices for crude and the volume of refined product that consumers can and will buy at a price high enough to support buying expensive crude.

It's very much analogous to the problem that airlines have. Can they sell enough tickets at a high enough price to justify buying expensive jet fuel (and to replace their fleet as they retire older aircraft)?

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rainsong on April 20, 2008 - 11:45am Permalink | Subthread | Parent | Comments top

Demand for oil should be going down with the end of the heating oil season and before the summer vacation season. It is becoming expensive to build inventories. Most publically traded major oil companies are in debt. The costs to borrow money in order to store oil are high and affect the after tax income of a company.

I imagine the price of gasoline will be going up in some areas on June 1.

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