Thursday, January 14, 2010

Gasoline a By-product of Distillate

From FT Energy...

US petroleum stocks fit for bursting

Weekly US energy inventory data release on Wednesday confirmed the unbelievable. US petroleum stocks rose in the week despite especially cold weather in the region during the period.
Meanwhile, Dennis Gartman of the Gartman Letter draws attention to the fact that aggregate inventory rose by 8.9m barrels, amongst the largest weekly aggregate increase ever.
More absurdly still, gasoline stocks are now at levels not seen in two years — some 10m barrels higher than they were last year.......
The market responded to the disconnect between distillate and gasoline demand by storing the former offshore in floating storage. This is easily done for distillates. But now that we’ve seen a bit of a pickup in demand for distillates because of the weather, a potential surplus of gasoline has been produced. And, unlike distillates, gasoline is not easily stored offshore. Hence the probable build up of gasoline stocks this week."
AND
"Strategic Petroleum Reserve

On a side note, it’s also interesting to hear from Gartman that the US strategic petroleum reserve is now full.
As he noted on Thursday (our emphasis):
Thus, the storage facilities here in the US are topped and topping up.
Noting that, we thought we’d take a look at the government Strategic Petroleum Reserve and we found that there are 297.6 million barrels of “sweet” crude in storage and there are 434 million barrels of “sour” crude in storage, for a total of 726.6 million barrels.
Then we noted a most interesting “comment” from the Energy Department on the website noting “inventory full as of December 27th, 2009.”

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