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Crude oil inventories at Cushing, Oklahoma, the critical pricing and delivery point for New York Mercantile Exchange (NYMEX) oil futures contracts, increased 1.204 million barrels to 33.325 million barrels the week ending July 31, a detailed analysis of the weekly oil data from the Energy Information Administration (EIA) showed on Wednesday.
“This propelled inventories to a 4.5-month high as the contango in oil futures contracts acted as a catalyst for storing barrels. Contango occurs when oil prices for future-month delivery are higher than prices for near-term delivery,” explained Linda Rafield, Platts senior oil analyst.
The weekly figures from the EIA show Cushing inventories were 9.766 million barrels greater than the five-year average and 14.525 million barrels more than year-ago levels as of the week ending July 31. Stocks at Cushing have increased a cumulative 5.087 million barrels over the past six weeks, driven by the deepening contango of the NYMEX oil futures contracts. The September/October futures price spread on NYMEX traded out to a low of minus $2.02 per barrel (/b), following the release of the data, after settling the previous session at minus $1.88/b.
Crude oil closed up nearly 1% yesterday at $71.29.
Total US commercial crude stocks increased 1.67 million barrels to 349.51 million barrels, which were 32.518 million barrels more than the five-year average and 52.647 million barrels more than year-ago levels as weak demand has reduced refiner appetite for barrels.
“But a good portion of the oil inventory build was on the isolated West Coast. Stocks on the West Coast increased 1.91 million barrels to 52.965 million barrels, while inventories edged up 700,000 barrels in areas east of the Rockies,” said Rafield.
Crude inputs dropped 174,000 barrels per day (b/d) to 14.434 million b/d, an exceptionally low level for this time of year and reflecting the weak state of demand. While refinery inputs continued to drop, imports fell back below 10 million b/d, declining 737,000 b/d to 9.287 million b/d. This decline in imports makes the prior week’s 10.024 million b/d appear to have been a temporary bunching up of cargoes.
According to Platts analysis stocks of refined goods has fallen as the driving season takes hold. “Gasoline stocks dipped 218,000 barrels to 212.858 million barrels, contributing to an overall product inventory decline of 4.4 million barrels. But at 770.9 million barrels, total US product stocks were 72.096 million barrels above the five-year average and 79.6 million barrels above year-ago levels. As product surpluses which had built up during the first half 2009 started to erode, crude surpluses started to rebuild from their prior run-down state,” explained Rafield.
