tonto.eia.doe.gov
govReleased on October 1, 2003
(Next Release on October 8, 2003)
Autumn’s Arrival
With leaves beginning to fall in some parts of the country and the first bout of cold weather sweeping across the Midwest and into the East Coast, the arrival of autumn has been announced. So too, in oil markets, are signs appearing that the summer season is over and the “shoulder period” between the summer gasoline season and the winter heating season, otherwise known as autumn, has begun.
U.S. crude oil inputs into refineries (i.e., the amount of crude oil being used by refineries) have declined by 682,000 barrels per day over the last two weeks. This is typical during autumn, as many refiners use the period between the gasoline season and the heating oil season to perform maintenance on their refineries in order to keep them running efficiently and safely. This period is usually chosen for maintenance because refinery margins are often lower at this time of the year, since demand for gasoline is dropping while heating oil demand still has yet to get into full gear. Of course, it is economically beneficial for refiners to decrease their output at a time when the difference between their cost of crude oil and what they can sell their output for is the smallest. Of EIA’s weekly survey respondents (which represent about 97 percent of the total U.S. crude oil inputs, while the remaining 3 percent is estimated), 13 refineries indicated declines of at least 20,000 barrels per day between the weeks ending September 12 and September 26. Clearly, the decline in the last two weeks is not a result of just one or two refineries being out of service, but is indicative of some refineries doing their seasonal maintenance.
With refiners using less crude oil during autumn, we also often see a decline in crude oil imports as well. This, too, has appeared to have happened over the last two weeks. Crude oil imports last week averaged 9.5 million barrels per day, or well over 1.2 million barrels per day less than the record amount imported two weeks earlier (the week ending September 12). Of course, with commercial crude oil inventories hovering around 280 million barrels, which is below the average range for this time of year, additional imports could help to boost inventories back to normal levels.
One final sign that autumn has arrived in oil markets is a shift in focus from gasoline towards heating oil. With spot gasoline prices and margins down sharply, and a narrowing spread between spot gasoline and heating oil prices, many traders and oil market analysts are beginning to shift their attention to heating oil. Distillate inventories have once again become the focus, with some mixed conclusions. While total distillate fuel inventories remain very near the 5-year average, heating oil inventories (high-sulfur distillate fuel), particularly those situated in the East Coast, remain significantly below the average for this time of year. As a result, many oil analysts have begun to take great interest in the weather patterns. With the first onslaught of cold weather in the Midwest and East Coast, analysts are not only dragging the quilts out of their closets, but also sharpening their pencils and getting their heating oil models up and running once again, now that autumn has arrived. Beginning next week (October 8), EIA will begin publishing residential retail heating oil prices for key states that consume significant quantities of heating oil.
U.S. Retail Gasoline Prices Decrease by Another 5 Cents
The U.S. average retail price for regular gasoline fell last week by 5.2 cents per gallon as of September 29 to reach 159.1 cents per gallon, which is 17.8 cents per gallon higher than a year ago. This is the fifth week in a row that prices have fallen, declining 15.6 cents since August 25, 10.6 cents of which has been in the last two weeks. Softening demand, coupled with looser supply, led to this predicted price drop, and the trend is expected to continue in the near future barring any unforeseen supply problems. However, with spot prices increasing some since OPEC announced its pledged cut of 900,000 barrels per day, the drop and duration of the decline could be dampened in the not-too-distant future should spot prices remain at current levels. Retail regular gasoline prices were down throughout the nation last week, with the Midwest seeing the largest decrease at 8.0 cents per gallon to hit 148.9 cents per gallon and the West Coast seeing a decrease of 5.7 cents per gallon to reach 186.1 cents per gallon, which remained the highest in the nation. California prices averaged 191.2 cents per gallon after falling 6.6 cents this past week.
Retail diesel fuel prices decreased last week by 1.5 cents per gallon as of September 29 to a national average of 142.9 cents per gallon, which is 0.9 cent per gallon lower than a year ago. Retail diesel prices were down throughout most of the country last week, with the Rocky Mountains seeing the largest price decrease of 3.4 cents to reach 148.0 cents per gallon. The Gulf Coast had the lowest retail diesel price in the country at 136.8 cents per gallon as of September 29. New England was the only area that saw an increase in prices, rising 0.2 cent to reach 155.5 cents per gallon.
Propane Inventories Decline
After weeks of increases, U.S. inventories of propane decreased by 0.4 million barrels last week, which positioned inventories at an estimated 65.0 million barrels as of September 26, 2003. Nationally, primary inventories continue to hold a position within the average range for this period. A slight gain of 0.2 million barrels was posted in the Midwest area last week, while the East Coast and Gulf Coast inventories fell by 0.1 million barrels and 0.5 million barrels, respectively. The Gulf Coast region continues above the normal range for this time of year, while the Midwest region inched closer to the lower end of the range, and the East Coast continues to track well below its normal range. Propylene non-fuel use inventories decreased by 0.2 million barrels last week, to 3.0 million barrels, a level that accounts for 4.6 percent of total propane/propylene inventories.
Note: Text from the previous editions of "This Week In Petroleum" is now accessible through a link at the top right-hand corner of this page. |
