London, 5 August 2010

Following another staggering build in the volume of refined products in storage last week, combined inventories of crude oil and products have hit their highest level for almost 20 years.

Commercial crude stocks fell almost 2.8 million barrels last week, according to the Energy Information Administration ( EIA), the statistical arm of the U.S. Department of Energy. But stocks of refined products surged by almost 8.9 million barrels, including an extra 729,000 barrels of gasoline, 2.2 million barrels of distillate fuels, 2.1 million barrels of propane/propylene and a massive 3.6 million barrels of "other oils".

Combined inventories of crude and products in commercial storage now total 1.125 billion barrels. They exceed even the level last summer, when the oil market was still flooded in the aftermath of the worst recession since World War Two. Not since September 1990 has the market been carrying this much inventory.

Refinery production is now running far ahead of demand. Gasoline stocks rose for a sixth successive week in what is a highly unusual build at a time of year when demand is meant to peak during the summer driving season (Chart 2).

Gasoline inventories are now 10.1 million barrels, or 4.8 percent, above year-ago levels. What is more important, inventories are still climbing at a time of year when they had already peaked and started to draw down in each of the previous five summers.

Ends --

By John Kemp, Reuters market analyst - for Commodities Now.

The views expressed are his own. Download charts here:

Attachments:

CRUD+PROD1.pdf	223 Kb
GASOLINE.pdf	190 Kb