U.S. energy demand remains down while supply remains high
EIA weekly data shows gasoline stocks up despite higher demand
Tom Stundza -- Purchasing, 6/18/2009 11:07:53 AM
Energy markets still have the feel of being rather undecided, suggests analyst Edward Meir at MF Global in New York. While weekly and monthly prices are erratic based on short-term inventory and demand trends, latest Energy Information Administration (EIA) data, issued Wednesday, shows that total product demand is down 6% from a year ago while stockpiled crude oil is 57% higher.
Even with domestic crude stocks down 3.9 million barrels on the week, there are 358 million barrels of crude inventoried in the U.S.--and stocks at the immediate-withdrawal Cushing terminal in Oklahoma unchanged at 29 million barrels--most energy economists see no shortage of supply.
Overall, distillate stocks rose by 300,000 barrels as capacity utilization was unchanged at 85.9% since EIA data shows distillate demand still running at weak levels, off almost 9% year over year. Meir says the big surprise was in gasoline, where stocks rose 3.4 million barrels although gasoline demand was up 1.1% from year ago, defying forecasts calling for a 100,000-barrel drawdown.
In the first quarter market analysis issued Wednesday, the EIA notes that capital expenditures reported by major oil and gas producers declined to $21.8 billion after two months of expansion. The quarterly average capex last year was $26.2 billion. "While the reduction in capital expenditures raise some concerns about future reserve additions and production, oil and natural gas production in the quarter continued to show growth," the report says.
"For the first time since early in 2004, the reporting companies' aggregate domestic oil production, foreign oil production, domestic natural gas production, and foreign natural gas production all increased over the comparable quarter in the prior year." Only domestic oil production in the first quarter remained below the average of the prior five first quarters. "The increase in production, despite the sharp drop in capital expenditures, is a result of the lagged effects of higher capital expenditures in previous quarters based on relatively high prices," the EIA analysis says
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