DOE, API Distillate Stocks Data Seen As Bullish, No Relief Soon
Dow Jones Newswires
(This article was originally published Thursday)
By Marie Sanchez
OF DOW JONES NEWSWIRES
NEW YORK -- As crude oil and heating oil futures post fresh post-Gulf War highs, weekly inventory data shows no relief in sight.
The American Petroleum Institute released late Wednesday reported small bullish builds, and the Department of Energy report early Thursday was even more supportive, analysts said.
The API reported distillate stocks, which include heating oil and diesel fuel, built by only 658,000 barrels for the week ended Sep 1, to a total of 112.880 million barrels. The year-on-year deficit remains at 20%.
The DOE reported a draw of 100,000 barrels to 112.3 million barrels. A breakdown showed that heating oil stocks are running 38% behind a year ago.
"Last night's reports were bullish. The DOE numbers this morning are almost a mirror image. Directional analysis looks rather simple and there is every reason to believe that prices now have an unimpeded path to $40." said John Kilduff, senior vice president at Fimat USA Inc.
Analysts had said that builds of 3 to 4 million barrels were needed consistently to stave off price spikes similar to those seen in January.
Instead, heavier demand, refinery problems and tight crude stocks have restrained builds during the seasonal build cycle ahead of winter.
Chris Stavros, an analyst with PaineWebber, predicted that the clock had run out on building significant stockpiles.
"With inventories remaining at or near these levels we expect the likelihood of price spikes in heating oil to be great," Stavros said.
API economist John Felmy said the heating oil delivery system could be severely strained if homeowners and suppliers wait until the first cold snap to fill up their storage tanks.
"We simply request that homeowners and suppliers do what is prudent in preparing for winter," Felmy said, rather than delaying because of current high prices.
Felmy also recommended that the Clinton administration release funds now from federal programs to help low- and fixed-income customers prepare.
He also suggested financial aid to dealers severely hurt by last year's Northeastern heating oil shortage and for small, independent truckers hurt by high diesel fuel.
Peter Beutel, president of consultancy Cameron Hanover, Inc., said low distillate stocks combined with a bullish natural gas storage report Wednesday that helped push those futures to new highs was a bad omen for a warm winter.
"This is the most bullish, the worst possible scenario from the consumer's point of view," Beutel said. "Probably for the first time in history have they worked hand in glove like this."
On a more neutral note, the API showed crude stocks had built by 3.131 million barrels to 289.091 million barrels; while the DOE showed a smaller build of 2.8 million barrels to 289.5 million, well below a comfortable cushion.
The increase in crude oil stocks isn't really material, said Tim Evans, an analyst with IFR Pegasus, as OPEC considers raising output by 500,000 to 700,000 barrels a day.
Gasoline stocks declined in the API by a small 150,000 barrels; and by a larger 900,000 barrels in the DOE. Demand was softer at 8.51 million barrels a day. |
