Analysis of EIA Data
by
George Clemen, Industry Analyst
---------------------------------------------------------------------
February
27 , 2008
EIA
refining data shows
crude oil inputs to crude stills remain low due to slack demand and
the usual February maintenance cycle. It's impossible to argue that
the short term shut downs of refinery capacity from accidents and/or
maintenance is impacting supply because, despite the lower rates, refiners
continued to build gasoline supplies. Refinery Operable Capacity reported
by industry has not changed for months. It remains at 17.436 Million
Barrels per day. During February, refineries were operating at about
84.5 percent of that capacity. Last week, crude oil inputs were 14.624
million barrels per day. Input
graph
Refiners
are adding to crude oil inventories at a pace similar to the average
for past years.
In
the past week, refiners added 3.2 million barrels of crude oil to inventories
despite a slight reduction in imports and a slight increase in crude
feed rates to the refineries. Thus, the build resulted from increased
receipts of DOMESTICALLY PRODUCED crude oil, to the economic advantage
of US production companies. Crude
Oil Stocks The bulk of the increase occurred in PADD 3, the
Gulf Coast region, possibly signaling higher receipts from offshore.(What's
a PADD?)
Refiners
added 2.3 million barrels of gasoline to inventories, bring the level
to 232.6 million barrels. Gasoline
Stocks This build in inventories occurred primarily in blending
stocks -- components of finished gasoline. The extraordinarily high
stock levels may make refinery operations somewhat difficult in the
near term until the levels are brought back down into the normal operating
range. (Think about trying to pour coffee into several full cups) If
oil companies insist on holding the line on high gasoline prices, they
will have to decrease refining rates or shift emphasis to distillate,
which seems the most likely near term solution.
Distillate
inventories were drawn down 7.1 million barrels during February to a
total of 120 million barrels, leaving room for new product. Distillate
Stocks . Except for PADD V, refiners in all other regions are
on pace to build distillate inventories early this year. Of course,
should gasoline demand take off, which seems highly unlikely, distillate
can be upgraded to gasoline.
PADD
V, West Coast, refiners have a problem -- way too much product on hand.
Imports are at zero, so the only possible adjustments are to either
reduce refining rates further, or drop wholesale prices, hoping to move
more product. In the current economy, the consumer may be buckling down,
so a small price drop may have little impact.
Overall,
holding product prices high will push consumers toward conservation,
alternative transportation and less spending on other items. One can
make the case for forcing the consumer in this direction by looking
at the U.S. dependence on crude oil. Last week, the U.S. refined 14.63
million barrels of crude oil. 9.96 million barrels were imported. Thus,
the U.S. is dependent on foreign sources for 68 % of its oil. So, while
product imports are low, and refining rates are low, it is still the
case that we need to take immediate steps toward a more secure energy
future.
George's
Blog -- Submit Comments
---------------------------------------------------------------------
