The book is now closed on December. The final monthly numbers for heating oil supplies in the East will likely finish in between 34.2 and 36.4 MMbbls. This leaves a surplus to December 2008 of between 13% and 20.2% and the disposition to the December 2003-2007 average of between a 2.1% surplus and a 4.03% deficit.
Back in October, the latest date for which the EIA provides monthly numbers, the year-on-year surplus was 41.4% and the surplus to the 2003-07 average was 10.6%. With HDDs forecast to remain high through at least the next two weeks, and crude oil throughput in the East currently running around 32% below the 2003-07 average and 23% below a year ago, the table is set in January for another material contraction in the yearly comparisons.
- Winter storms might explain the poor demand figures in the East and Midwest for transportation fuels, but no such excuse exists for the lousy demand in the West (PADD V).
Crude oil imports jumped by 29% or 314 Mbbl/d to 1.03 MMbbl/d and refinery throughput dropped by only 20 Mbbl/d. However, crude oil supplies dropped anyway, down 0.95 MMbbls (-1.7%). At the same time diesel fuel supplies rose by 0.35 MMbbls (2.9%) to 12.2 MMbbls and the year-on-year surplus increased to 0.44 MMbbls (3.8%). Gasoline supplies in the largest automobile market in the U.S. rose by 2.3 MMbbls (8%).
Therefore, it is not unreasonable to say that industrial and commercial demand (intermodal) as well as residential demand (transportation) in the West, as in the four other market areas around the U.S., for fuel is poor.
Regardless of this fact, the smart money [sic] on Wall Street obviously thinks that IT JUST DOESN’T MATTER!
Stephen Schork is the Editor of, "The Schork Report"and has more than 17 years experience in physical commodity and derivatives trading, risk systems modeling and structured commodity finance.