Noesis: Crude Oil, Gasoline and Diesel Stock and Price Forecast



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January 11, 1999
NOTICE TO FREQUENT VISITORS: In a few weeks, the "Current Forecast Page," plus additional features will become services reserved for paying subscribers. Past forecast pages, graphs, links and many additional archived documents will be available to the public for free. Prior to initiating the "for-pay" services, a special offer will be made to only those who are subscribers 30 days before startup. Current subscribers will be able to take advantage of a 33% discounted annual rate which will be fixed FOREVER, as long as the subscription continues. So, if you think you may be interested in paying for a subscription to full services for the NOESIS site, you should go to the bottom of this page and subscribe to the NOESIS update service now. You will NOT be committing to anything right now -- but you will receive the special offer made to subscribers, and of course, you will receive notice when the site is updated. Crude Oil During the last two weeks of December refiners were successful in drawing down crude oil inventories from 339.7 to 321.8 million barrels. Refiners pulled the level of inventories down by reducing crude oil imports by 1.4 million barrels per day while simultaenously increasing input to crude stills from 14.7 to 15.4 million barrels per day, or 98.2 percent of capacity. (If demand is steady, those changes alone account for 14.7 million barrels in 7 days). The extremely cold weather that swept across the nation during the last two weeks of the year allowed refiners to deliver just enough heating oil from their tanks to make the higher refining rates possible. The draw down allows the oil companies pay less taxes on inventories. It is also occurred when the cost of replacement crude oil was the lowest of the year, thus refiners have an opportunity to refill their storage tanks with less expensive crude oil.

This last minute manipulation of inventories and refining rates should not be mistaken for change in the trend of refining operations. There will be a short period of refilling crude oil tanks, but refining rates will go back down. Demand for crude oil and refined products is almost always the lowest during February, which is also the month most refinery maintenance occurs. Demand for crude oil is not expected to pick up significantly until March. Even though the weather was cold, refiners made more distillate than consumers used, so they still have extremely high inventories of distillate. The total amount on hand increased to 153.9 million barrels -- the highest level of the year. Gasoline inventories remain lower than last year at 210.8 million barrels, but are adequate going into the spring season. A slow down in refining rates will help bring down the distillate levels, but could result in a shortage of gasoline made by U.S. refineries. The temperature in the Northeast and Midwest is critical because cold weather will help increase demand for heating oil (distillate) and will reduce demand for gasoline. Without increased demand for distillate, refiners and wholesalers may be dependent on imports to meet the spring demand for gasoline because they will not be able to run the refineries at high enough rates. (see "background tips").

EIA U.S. Refining Data
Inputs and Imports are 4-week Avg
	Input/Output	Million BPD	Imports	Million BPD	Inventory	Million BBL
Week	Dec 25/	Jan 1	Dec 25	Jan 1	Dec 25	Jan 1
Crude Oil	15.2	15.4	9.0	8.6	337.1	321.8
Gasoline	8.3	8.3	0.525	0.575	209.9	210.8
Distillate	3.4	3.6	0.243	0.240	152.6	153.9
Resid	0.8	0.8	0.259	0.254	41.9	43.9

W orld crude oil prices reported by EIA as of January 1, 1999: Saudi Arabian Lt (34 API) - $10.03, Nigerian Bonny Light (37 API) - $10.06, UK Brent (38 API) - $10.44, and Mexico Maya (22 API) - $6.38.

Posted prices for crude oil as of January 10, 1999 were: Scurlock, West Texas Intermediate (WTI), $10.50; Louisiana Lt. Sweet Onshore $10.00, Oklahoma Sweet $10.50; Kern River (13 API) $7.50; Alaska North Slope (28 API) $11.07; and Kettleman Hill (34 API) $9.45(Avg)

East Coast Gasoline and Heating Oil

East of the Rockies - East Coast stocks of gasoline increased 1.6 million barrels. Levels in PADD I are at 61 million barrels, which is 3.8 million higher than last December. PADD II and III tank levels are about the same as last year with no significant change within the last month.

Continued competition in the Eastern states keeps gasoline prices low and there does not appear to be any reason to believe prices will increase in the near term.

Gasoline prices continued their slide -- a holiday gift for travelers. EIA reported gasoline prices per gallon for Regular on January 1 were as follows: PAD I - $.93, PAD II - $.90, and PAD III - 0.89.

Diesel prices on January 1 were also lower: PADDs I - $.97, PADD II - $.94, and PADD III - $.94

FORECAST: Gasoline prices will continue to follow the price of crude oil, and should decrease through February, then remain reasonably low through 1999.

The price of heating oil will remain low through 1999.

Rocky Mountain Gasoline and Diesel

Rocky Mountain - the price of regular gasoline decreased to $.96 per gallon and the price of diesel remained $.99 per gallon.

Rocky Mountain prices will continue to mirror changes in the price of crude oil.

West Coast Gasoline and Diesel Forecast

West Coast - Refinery operations in the Western U.S. remain steady and positively boring. Profits are still very good for these refiners since crude oil prices are still extremely low relative to the price of products. Of course, those companies who also produce the oil are probably losing money on their oil production.

On January 1 the average price of (reg-mid-premium) gasoline in PADD V was $1.15 per gallon. The price of Regular in PADD was $1.10 per gallon. Reformulated gasoline costs $1.13 per gallon.

The average price of diesel in PADD V dropped to $1.06 and Californian's are paying $1.11 per gallon.

FORECAST: The price of gasoline and diesel should continue to follow the price of crude oil. There is not likely to be much change over the next couple of months unless one of the refiners breaks out, lowers prices and tries to take additional market shares.

Many readers write in and ask for more data or specific information. You are encouraged to explore the NOESIS Index Page and the Links Page. The links listed have been especially selected to get you to data and information which will supplement the information you find on the NOESIS site. They are all great sites! For EIA data used in these forecasts, select the Energy Information Administration link. Once there, select Petroleum. Then select "Weekly Petroleum Status Report" The TEXT version gives you basic data. Or scroll down and select pdf, text or html files for tables and graphs. There is a wealth of information on the EIA site. With the analytical tools you've picked up by reading the NOESIS reports, you should be able to use most of the data! As always, if you have questions, send email. contact George Clemen at NOESIS

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