EIA expects little improvement in US oil demand

Total US petroleum demand has steadily decreased, down 6.6 % year-over-year on a four-week moving average, but implied gasoline demand readings improved, a sign that the sharp decline in prices at the pump may be affecting consumption patterns, an analysis of the weekly oil data from the Energy Information Administration (EIA) showed.
Gasoline demand inched down 93,000 bpd to 9.002 mm bpd week-over-week, for the reporting week ended November 7. But on a four-week moving average, implied gasoline demand, while still 1.9 % below year-ago levels, has slightly improved over the past three reports. The previous week implied gasoline demand was down 2.3 % year-over-year.

As of November 10, retail gasoline prices averaged $ 2.224/gal, a drop of 17.6 cents/gal week-over-week and 88.7 cents/gal lower than year ago levels, according to EIA.
But the current level of gasoline demand was still insufficient to cause stocks to decline. Gasoline stocks increased 2 mm barrels to 198.1 mm barrels, and that was with imports having almost been halved. Gasoline imports dropped 451,000 bpd to 589,000 bpd, but the decline was concentrated in blending components.

Little improvement has been seen in distillate demand, which is more closely correlated to the broader economy, but the likelier explanation is a lack of demand for winter fuels. Distillate demand at 3.992 mm bpd was still down 4.6 % year-over-year on a four-week moving average.
The combination of a lack of demand for heating oil and a jump in production given the profit margins associated with middle distillates resulted in a 600,000-barrel build in inventories.

While diesel stocks declined 700,000 barrels to 18.8 mm barrels, heating oil inventories increased 1.3 mm barrels to 41.7 mm barrels. At 41.7 mm barrels, US heating oil stocks were 11.6 mm barrels below the five-year average and 5.5558 mm barrels below year-ago levels. Total distillate stocks at 128.351 mm barrels, were 1.293 mm barrels above the five-year average, but 5.061 mm barrels below year-ago levels.
Both gasoline and distillate yields were fairly constant despite a negative RBOB crack spread on NYMEX compared to the heating oil crack which has been running at a $ 17/barrel premium.

But the NYMEX crack spreads are not always representative of margins along the Gulf Coast where refiners typically run a heavier slate of crude and the sour grades have been running at steep discount to the benchmark light sweet crude. The gasoline yield was 60 %, a fairly high level for this time of year while the distillate yield was 29.34 %.
While product stocks were building, crude inventories were unchanged, but for the fifth consecutive week, inventories at Cushing, Oklahoma -- home of the NYMEX delivery point -- increased. Stocks at Cushing rose 441,000 barrels to 17.985 mm barrels.