11/05/2009
In the latest
weekly petroleum report from the Department of Energy, the Energy Information
Administration estimated that crude oil stocks declined by 3.94 million barrels
in the week ending Oct. 30. This took US crude oil inventories to 335.91
million barrels, which still is near the upper boundary of the average range
for this time of year. However, this narrowed the crude oil stocks surplus to
last year to 23.8 million and narrowed the surplus to the five-year average to
21.58 million. The decrease in crude oil stocks came as crude oil imports were
down 764,000 barrels per day (bpd) to 8.13 million barrels, which is 1.85
million bpd below a year ago and 2 million bpd below the five-year average. This
level of imports ranks in the bottom 1 percentile of crude oil imports over the
last five years, with only three weeks coming in lower.
At the same time, the
quantity of total petroleum products supplied to the market was up 620,000 bpd in
the latest week. This increase in total petroleum product demand may signal
some optimism about the US economy as third-quarter GDP grew by a
larger-than-expected amount, housing prices rose, there were strong corporate
earnings reports and the Federal Reserve is signaling that the US is in the
early stages of an economic recovery.
Informa Economics continues
to believe that, once the world recession abates, crude oil will garner support
from a number of factors, including increased demand from present levels, an
under investment in oil-producing countries, OPEC's current production
restraints and a drop in productivity in existing oil-producing fields. Also,
if crude oil imports do not increase, the expected growth in demand would imply
a sharper-than-normal, seasonal drop in US crude oil stocks between now and
early January. Also, Informa's long-term bullish sentiment is underpinned by
expectations for further weakness in the US dollar given the US government's
huge spending programs, massive budget deficits and expansionary money supply
policy