REPORT / Crude overhang dampens mogas draw to new low
10/27 18:39
REUTER POLL FORECAST* ACTUAL FOR
FOR WEEK ENDED 10/23/98 WEEK ENDED
------------------------------------------------------------
CRUDE............ UP 4.000 MLN 335.730 UP 7.867 MLN
DISTILLATE....... UP 0.500 MLN 147.761 UP 0.637 MLN
GASOLINE......... DN 1.000 MLN 197.258 DN 2.080 MLN
UTILIZATION...... UP 1.50 (PCT PT) 88.5 PCT UP 1.7 PCT PT
*NB - The forecast is derived by polling at least six
market analysts/traders, omitting the high and low forecast and
averaging.
NEW YORK, Oct 27 - U.S. gasoline inventories have
finally fallen below year-on-year levels but sentiment was
still dampened by the overhang of a hefty build in crude
stocks, traders and analysts said on Tuesday.
"There is some sign that the picture for the products
market is now changing, now that gasoline is below year-ago
figures," said Thomas Blakeslee, a trader at Eildon
Associates.
"But with crude stocks so high, it is hard to get bullish," he
added.
The American Petroleum Institute (API) reported that
gasoline stocks have fallen by over 2.0 million barrels in the week
ended Oct. 23 to 197.3 million, a marginal 390,000 barrels lower than
stocks reported for same time last year.
Although the draw was linked mainly with the drop in refining
production during the autumn turnarounds, analysts said implied
gasoline demand was still strong at 8.5 million to 8.6 million
barrels per day (bpd), despite the fact that the peak gasoline demand
season of summer is over.
"Gasoline production has come off, but demand is robust with
the economical environment and the large appetite for
four-wheel drives," Blakeslee said.
The crude build of nearly 8.0 million barrels, however, was
double what market watchers expected, despite factoring in a
correction in the API's data to bring it more in line with the
previous week's larger build reported by the U.S. Department of
Energy (DOE).
"There was certainly a bigger build in crude than expected,
especially in PADDs 1, 2 and 5 of around two million barrels each. It
was expected that it would have to catch up with the DOE's, but it
has more than caught up," said trader and analyst Tom Bentz at
Cresvale International.
"What this means is, although the APIs are supportive on
products, is that there are plenty of crude supplies -- over 29
million barrels higher than year-ago levels -- and these will
have to make their way, become refined into products," Betnz
added.
Refiners were also coming out of turnarounds with
throughputs rising 1.7 percent to 88.5 percent at a rate of
13.7 million bpd or churning out an additional 258,000 bpd of
oil products.
"Directionally, overall inventories will continue to
decline into the fourth quarter, which is somewhat positive.
Eventually, (crude) prices should move in a $13 to $16 (per barrel)
trading range...but we have to wait to see how the winter
turns out," said Nizam Sharief, an analyst with Houston-based
Horsnby & Co.
In after-hours ACCESS trading on the New York Mercantile
Exchange, the December crude contract was trading at $14.05, down
around eight cents per barrel from its close earlier Tuesday, while
November gasoline was off 0.14 cent per gallon at 44.00 cents.
November heating oil slipped 0.24 cents per gallon to 38.55
cents.
"Nobody was expecting a very positive report...the focus is more
on Hurricane Mitch, which has already shut in production in Mexico
and could make its way into the Gulf," said Bentz. |
