Low Price Pushes Gasoline Demand Higher
- Gasoline use gains in Asia and the United States
- U.S. refining surges
- American crude oil production approaches all-time high
- Low CDDs push natural gas prices toward support
Table covers crude oil and principal products. Other products, including residual fuel oil and “other oils” are not shown, and changes in the stocks of these products are reflected in “Total Petroleum Products.” Statistics Source: Energy Information Administration “Weekly Petroleum Status Report” available at www.eia.doe.gov
The Matrix
The impact of lower prices is being seen in dramatic growth in global gasoline demand. In April, world-wide demand reached 21.5 million barrels daily, a gain of 1.1 million barrels daily over the previous month. The increase has been led by Asia and the United States.
Domestic demand for gasoline reached 9.655 million barrels per day during the week ending June 19th, a weekly gain of 479,000 barrels daily. Demand has surged 9.6 per cent over last year at this time.
Prices have not reacted bullishly despite the gains in consumption. Some of this resistance reflects seasonal weakness common to gasoline prices post-Memorial Day. In addition, gasoline stocks saw a large build during the week, a gain of 700,000 barrels daily which is weighing on the market.
Refineries in the U.S. are operating at 94 per cent of capacity, supporting the build in supplies. This was apparent in the 1.8 million barrels increase in distillate fuel oil inventories. Demand for distillate fuel oil fell to 3.6 million barrels daily. This was near the five year low for this season.
Supply/Demand Balances
Supply/demand data in the United States for the week ending June 19, 2015 were released by the Energy Information Administration.
Total commercial stocks of petroleum decreased 6.7 million net barrels during the week ending June 19, 2015.
Builds were reported in stocks of RBOB, distillates, and propane. A draw was experienced in stocks of fuel ethanol, K-jet fuel, residual fuel oil, and other oils.
Crude oil supplies in the United States decreased to 463.0 million barrels, a draw of 4.9 million barrels from storage. This was the 8th consecutive decline in stocks of crude oil this year.
Crude oil supplies decreased in three of the five PAD Districts. PADD 2 (Midwest) crude oil stocks experienced a decrease of 1.3 million barrels. PADD 3 (Gulf Coast) crude oil stocks declined 4.2 million barrels.
PAD District 5 (West Coast) storage fell 0.2 million barrels. PADD 1 (East Coast) stocks rose 0.4 million barrels. PADD 4 (Rockies) stocks increased 0.3 million barrels.
Cushing, Oklahoma inventories declined to 56.2 million barrels, a decrease of 1.9 million barrels.
Domestic crude oil production increased 15,000 barrels daily to 9.604 million barrels per day.
Crude oil imports averaged 6.765 million barrels per day, a daily decrease of 0.302 million barrels.
Refineries used 94.0 per cent of capacity, an increase of 0.9 percentage points from the previous week.
Crude oil inputs to refineries grew 250,000 barrels daily; there were 16.532 million barrels per day of crude oil run to facilities. Gross inputs, which include blending stocks, increased 146,000 barrels per day to 16.794 million barrels daily.
Total petroleum product inventories saw a decrease of 1.8 million barrels. Gasoline stocks rose 0.7 million barrels; total stocks are 218.5 million barrels.
Total product demand rose 0.711 million barrels daily to 20.682 million barrels per day.
Demand for gasoline increased 479,000 barrels per day to 9.655 million barrels daily.
Distillate fuel oil supply gained 1.8 million barrels. Stocks are 135.4 million barrels. National demand was reported at 3.608 million barrels per day during the report week. This was a weekly decrease of 0.509 million barrels daily.
Propane added 1.3 million barrels to supply. There are 82.0 million barrels in storage. Current demand is estimated at 0.928 million barrels per day, a decline of 110,000 barrels daily from the previous report week.
Natural Gas
According to the EIA: The net injection reported for the week ending June 19 was 75 Bcf, down from 89 Bcf the previous week. This compares with the five-year average increase of 86 Bcf for the week and last year’s increase of 110 Bcf. Working gas inventories for the storage week totaled 2,508 Bcf, 695 Bcf (38%) higher than last year at this time and 35 Bcf (1%) higher than the five-year (2010-14) average.
Inventories of natural gas have increased 1,047 Bcf since the start of the injection season.
This is seven percent more than was injection last year at this time.
Warmer weather has not been enough to rally prices. The Energy Information Administration reports temperatures four degrees warmer during the report week than the 30-year normal average.
Futures trading involves significant risk and is not suitable for everyone. Transactions in securities futures, commodity and index futures and options on future markets carry a high degree of risk. The amount of initial margin is small relative to the value of the futures contract, meaning that transactions are heavily “leveraged”. A relatively small market movement will have a proportionately larger impact on the funds you have deposited or will have to deposit: this may work against you as well as for you. You may sustain a total loss of initial margin funds and any additional funds deposited with the clearing firm to maintain your position. If the market moves against your position or margin levels are increased, you may be called upon to pay substantial additional funds on short notice to maintain your position. If you fail to comply with a request for additional funds within the time prescribed, your position may be liquidated at a loss and you will be liable for any resulting deficit. Past performance may not be indicative of future results. This is not an offer to invest in any investment program.Vol. PH 04 NO. 25
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