Taking a look at the First Quarter graphs

It is the end of the first quarter and so I thought I would include in this post the graphs from the EIA showing the current state of stocks, in crude, gasoline and distillate.  This is more for historical reasons, since I gather that a number of us now glance at these as they come out every week.  However it does provide a snapshot of where we are at a time when the winter is over, and before the high demand of the summer driving season comes upon us.

The EIA in their summary comments have noted that the month will see a lot of refinery maintenance, and that this will reduce the stocks in gasoline, since demand will continue, while supply is reduced.  This, they suggest, may provide some additional pressure on prices over the month, despite a relatively even demand.

Anyway here are the graphs. To begin with US stocks of crude are currently well ahead of average, perhaps in part because we still do not have all the refineries back on line after the hurricanes.

In so far as it is likely to, it appears that production has restabilized after the summer. However we have lost about 500,000 bd.

The make-up has not been supplied by imports.

This has been running about the same as last year, but the input to the refineries has been reduced due to hurricane damage, allowing some buildup in the crude stocks.

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Turning to gasoline, the gas stock picture is perhaps the most interesting, since it shows a significant increase over normal volumes, though bear in mind that other countries which store as refined product rather than crude, may have been selling this to us since driving is down, relatively, in the winter.

Thus one sees, in imports, slightly higher consistent levels over the past months.

This is in contrast to production of gasoline

which is slightly lower than normal, due to the problems with refineries discussed above.  Domestic demand, however, remains somewhat higher than last year, perhaps due to the mildness of the weather.

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The other significant production from refineries is, of course, the distillate, for heating oil and diesel, and the picture here shows that domestic stocks are also above normal, although not varying quite as dramatically as did the gasoline.

Domestic production while holding up while there was the potential for demand should the winter have been harsher, is not dropping off as that need diminishes.

The anticipated demand was also evident in the imported levels of distillate leading into the winter, but with that passing, the imports have fallen back to last year's level.

And, perhaps because of a little overstocking at times, demand is also now falling below last year's level.

Incidentally there has been quite a bit of discussion of these curves, and perhaps other explanations in the comments from the last two or three posts, so it might be useful, with the curves in front of you, to glance at some of those again.

I think I need to see the average seasonal adjustments in these curves before making any kind of observations. Excepting for the observation I just made.
Hello Heading Out,

Thxs for posting this info.  The major conclusion I draw from these graphs is that I see no solid proof that America has powered down in fuel consumption in any meaningful way yet, even though gas prices are much higher than pre-Katrina levels.

Bob Shaw in Phx,AZ  Are Humans Smarter than Yeast?

The key bit of data that is missing. What the oil stocks are made up of. What percentage is sweet light???? There is no refinery issue if most of the stocks are sweet (I could build a sweet light crude refinery in my back yard) a heavy sour refinery is another matter. If most of the crude stocks are heavy sour we have a problem.

I suspect it is mostly heavy sour but without hard data its just a guess.

Key bit of missing Data..

I am going to ask our inventory guy today whether he has to supply API and sulfur content when he turns in our inventory numbers. That is an interesting question.

RR

My inventory guy showed me a copy of what he sends in every month to the EIA. It does contain information on API and sulfur content, so they do have the information.

I don't really see a heavy sour build as an issue, though. If refineries are building inventories of heavy sour crude, that means they must be configured to process it. You don't build heavy sour if you aren't. The yields from heavy sour crudes are not substantially different than from light sweet crudes as long as the refinery is configured for a heavy sour slate.

RR

I guess there is one other issue I wasn't considering. Heavy crudes will limit capacity. So, if the crudes that are building are in general heavy (and/or sour) there will be a reduction in throughput, and therefore a reduction in the production of gasoline and diesel.
That's interesting. I wonder if it's possible to get this information from the EIA. Anybody here think they might be able to get hold of this data?
Thank you once more HO, a lot of information in this post.

The overall picture is a shift in the US from crude imports to refined products imports. Demand is not retracting (at least at a significant pace).

The economic strength of the US seems to be still offsetting the moderately high prices. Difficulties in importing crude or refining it are met simply by importing the final product.

This data also tells you something about the threats made by foreign exporters of cutting crude supply to the US: it'll have a much smaller impact than intended. As long as the strong position of the dollar holds the US will get all the oil needed from the world markets, as crude or finished product.

"As long as the strong position of the dollar holds"

Have you looked at the gold market lately?  There is your prognosis for the US dollar.

Maybe you could explain this position. And then afterwards you could take bets on how right you were going to be.

Oh, I'm sorry, you didn't want to do that? Oh, OK. Maybe next time.

So that long might not be that long.

I've that same feeling but I'm no economist, I left it open to everyone's sense.

Using the same site, the EIA's "This Week In Petroleum" I have kept data on US crude production, plus US crude imports, plus US gasoline imports plus US distillate imports. A ten week running average of the total of these four, last August 26th, before Katrina, was running 17,125,000 barrels per day. Yesterday's data, for week ending March 31s, found the ten week running average for these four totaling 16,375,000 barrels per day. That is an average drop of 750,000 barrels per day from last August.

What's happening to those barrels? Where did they go?

Ron Patterson

You're comparing imports in mid Jun-Aug with imports from mid Jan-Mar?  Where did they go?  How about they just weren't needed (less driving in the winter).  I think you should compare it to last Jan-Mar.
You are right but we are still way down. The same 10 week period last year gives us a figure of 16,747,000 barrels. So for the past ten week period this year we have used 372,000 barrels per day less than we used during the same 10 week period last year. (US crude production + US crude imports + US gasoline imports + US distillate imports)

Where did all those barrels go, especially in light of the fact that inventories in all three are well above those of the same period last year?

If we are still using the same amount of gasoline and other products as last year, that is a real poser.

Ron Patterson
Pensacola, Fl.

Part of the reasons inventories are high is 15mmb post K/R crude loans from spr and product loans from overseas. I would appreciate invormation regarding when these loans need to be repaid.
Heading Out:
   Thank you once again for the sigificant amount of work you've done in putting this information into a comprehensible form. I have a few comments and thoughts I would like to share with all of you, and please tell me whether I have any foundation in them or if I am completely wrong.
  If I were running a large refinery, I think it would be rather convenient to go ahead and perform any and all deferred maintenance at this point (that I have been putting off for the past year) for a couple of reasons:
  1. I get the impression that the refineries have been running all out to keep up with demand, hence maintenance is going to be a big issue in keeping these complexes online.
  2. It would be better to hold onto all that crude and refine it at a later time, as the end products, such as gasoline and distillates, will bring me a significantly higher price if I just wait a few months before I begin production again in earnest.
   Now, I am by no means a conspiracy theorist, but I think Exxon-Mobil and Chevron-Texaco (that is 4 major oil companies that merged to become 2 really big ones) would not hesitate to exploit such a scenario, I have to think that they would not mind the profits from such a course. However, this whole sweet vs sour crude thing is far beyond my area of expertise (paramedic and Emergency Room RN. Is it possible that the majors have been stocking up on heavy crude only to have no other options available (ie heavy sour crude is better than not having any crude oil at all)? A question I would like to pose is it possible that during the routine maintenance now going at these refineries, is it possible to convert the production process to accomadate all of the heavy/sour crude now on the market, or would this entail such a re-engineering of the basic process that I would have to build entirely new refinery? Seeing as currently no one is building any new refineries in the US at present, the latter would seem not to be occuring in the near future.
  How much more difficult is 'cracking' heavy sour vs sweet light crude? (Man, I love that term. It's so Macho!)
    As always, I would appreciate the TOD community's input on this.

              Subkommander Dred

If I were running a large refinery, I think it would be rather convenient to go ahead and perform any and all deferred maintenance at this point (that I have been putting off for the past year) for a couple of reasons:

The primary reason for doing it now is because the weather is better than normal, and typically we have been able to build up some stocks through the winter.

Is it possible that the majors have been stocking up on heavy crude only to have no other options available (ie heavy sour crude is better than not having any crude oil at all)?

If a refinery is configured for it, they are probably stocking up on heavy because the price differentials are very large. At current prices heavy sour crude makes a lot more money than light sweet.

A question I would like to pose is it possible that during the routine maintenance now going at these refineries, is it possible to convert the production process to accomadate all of the heavy/sour crude now on the market, or would this entail such a re-engineering of the basic process that I would have to build entirely new refinery?

You wouldn't have to build a new refinery, but it isn't something you could slap in during a spring turnaround. It requires significant modifications, and hundreds of millions in capital (coker and hydrotreater for sure).

RR

There's also not a whole lot of spare hydrogen available, especially in the Gulf.
"heavy sour crude is better than not having any crude oil at all"

As a doomer, I guess I'm predisposed for this to conjure in my mind the old Hee Haw song, "Gloom, despair and agony on me... if it weren't for bad crude I'd have no crude at all..."

Some harsh words for U.S. energy policy:

Consumers must work with oil powers to tackle crisis

"OPEC has no power. The IEA has some... The U.S. has not been willing to reduce its demand. I would have said the country with the most responsible energy policy at the moment was China, which has deliberately reined in demand."

They also think we're stocking the wrong kind of reserves:

Although IEA member the United States has a strategic reserve, it did not hold the kind of refined products needed last year and had to rely on stocks held by European members.

"When you stick a load of refineries in a hurricane-prone area, you had probably better have some stocks of products in case the refineries get hit," said one analyst who asked not to be named.

"If it weren't for the European members agreeing to release stocks of product to the U.S., the oil product market would have gone wild."

In response to the hurricane damage, OPEC offered up all its spare capacity, but consumers wanted products or light, easy-to-refine crude, not the heavy oil OPEC could provide.

The situation differed from the time of the U.S.-led invasion of OPEC-member Iraq in 2003 when other OPEC producers still had the power to fill supply gaps.

"What happened in 2003, was that OPEC's capacity was enough. We tried to help in 2005 when OPEC's capacity was not enough to deal with the supply disruption," said Mandil.

I agree with other posters that demand for gasoline does not seem be down year over year even with high prices.

Domestic production of just about everything is down leading to crude builds.

We are currently making up for lack of refining by importing more refined products.

So is there a chart or statistics of what non U.S. gasoline and distillate stocks are doing?  Are they being maintained or are/were they being drawn down by U.S. purchases which can't be maintained long term?

How much more difficult is 'cracking' heavy sour vs sweet light crude? (Man, I love that term. It's so Macho!)

If the crude is sweet enough you don't have to crack it at all.  All you need is a fractionating column, which runs at relatively low temps and pressures.  Crackers, hydrocrackers, cokers, and hydrotreaters run at high temps and pressures and tend to blow up on unscheduled shutdowns and startups.

I was under the impression that "sweet" verses "sour" referred to the amount of sulfur in the oil. And it is the "heavy" verses "light" that refers to the amount of cracking and the amount of hydrogen that must be added.

But now that you mention it we always seem to divide oil into two catagories, the "light-sweet" verses the "heavy sour" stuff. Is there no "light-sour" or "heavy-sweet" oil?

Am I missing something here?

Ron Patterson
Pensacola, Fl.

No, you aren't missing anything, just pointing out an oversimplification about what's out there. Yes, there are light-sour and heavy-sweet crudes. Nearly all of China's onshore crude production is heavy-sweet (including their declining supergiant Daqing), which is why they continue to invest billions to upgrade their refineries to run sour ME crude now that they are big importers. Arab Light is a classic light-sour.
Mostly correct. Sweet and sour refer to sulfur. Heavy versus light refers to the density, which tells the amount of cracking that will be needed. Cracking can be done in a hydrocracker, but it can also be done in a coker where no hydrogen is required. In addition, sulfur removal generally takes place in a hydrotreater, which will do some cracking, but also requires hydrogen to turn the sulfur in the hydrogen sulfide.

There are light sour crudes. I am not familiar with any heavy-sweet crudes, but I would guess that there are some. But most refineries configured for a heavy crude operation are also configured for a sour crude operation, hence the heavy sours are what you are looking for (because they are much cheaper).

Hope that helped.

RR

There is also waxy vs asphaltic. Waxy is terrestrial sourced oil from leaf cuticles or something, and asphaltic is marine sourced from algae or something. Asphaltic makes roads. I believe a few years ago Australia was producing waxy oil and needed to export it and buy asphaltic. They were looking at one oil shale deposit just because it was asphaltic and they neede asphalt. I think Daquing is waxy, too.
I'm pretty sure I got that right. If not, someone here will correct me.
It would appear that the present prices did not do much to change driving habits.  It's still an open question as to whether the Katrina/Rita sprice spike would have been enough, as it didn't last long enough to "stick".

It would be interesting to remove the infuence of the mild winter and reduced home heating oil use from the graph.  This would serve to make the remaining use (presumably mostly from transportation) look larger.  In other words, some of what might look like reduced use is just the mild winter.  

I don't really know ANYONE who has reduced their VMT in response to the fuel costs.  Period.  They do complain more though, but it's not a big topic usually.