Wednesday, September 01, 2010

Crude Inventories Grow as products move lower

U.S. crude inventories rose more than analysts' expectations last week, according to data released Wednesday by the U.S. Department of Energy.

Crude oil stockpiles rose by 3.4 million barrels to 361.7 million barrels for the week ended Aug. 27, compared with an average survey estimate of an 800,000-barrel increase.

Investors continued to support early gains, spurred by encouraging manufacturing data and a weaker U.S. dollar, after the EIA's report. Crude oil futures for October were recently up 2.9% at $74.00 U.S. a barrel on the New York Mercantile Exchange. October contracts for gasoline were recently up 2.2% at $1.8985 U.S. a gallon and heating oil was up 3% at $2.0526 U.S. a gallon.

Inventories for crude oil and petroleum products have burgeoned since this spring on weak demand amid economic uncertainty. They are hovering well above their five-year range. Gasoline demand over the past four weeks was just 1.9% higher than the same period a year ago.

Demand for this motor fuel has been lackluster all summer, and the peak season for gasoline which officially draws to a close with the Labour Day holiday next Monday. Demand for distillate fuel, which posted steeper declines during the recession than gasoline, is up 7.8% compared to last year.

Gasoline stockpiles fell by 212,000 barrels to 225.4 million barrels, the department's Energy Information Administration said in its weekly report. That compares to the drop of 200,000 barrels based on analysts' forecast.

Distillate stocks, which include heating oil and diesel fuel, declined by 739,000 barrels to 175.2 million barrels. Analysts projected it to expand by 1.1 million barrels.

Refining capacity utilization fell by 0.7 percentage points to 87.0%, versus the expectation for a 0.1-percentage-point decline.

API pegged refining utilization at 84.8% of capacity last week. The industry group reported that gasoline inventories fell 600,000 barrels and distillate stocks dropped by 1.9 million barrels.