New York, 9 March 2011

Platts: U.S. crude inventories in Cushing, Oklahoma, the delivery point for New York Mercantile Exchange (NYMEX) oil futures contracts, hit an all-time high of 40.263 million barrels, up 1.693 million barrels the week ending March 4, according to data released Wednesday by the U.S. Energy Information Administration ( EIA).

Total U.S. crude stocks rose 2.516 million barrels to 348.891 million barrels, as imports rebounded, climbing 290,000 barrels per day (b/d) to 8.3 million b/d. The bulk of increases in both stocks and imports occurred along the Gulf Coast.

Analysts polled by Platts had projected a build of 2.3 million barrels. At 348.891 million barrels, U.S. crude stocks were 14.643 million barrels greater than the five-year average and 5.888 million barrels more than year-ago levels.

Gulf Coast stocks increased 3.614 million barrels to 103.034 million barrels, with a 315,000-barrel-per-day increase in imports contributing to the inventory build.

While crude inventories increased, product stocks continued to tumble. U.S. product stocks fell 8.789 million barrels to 695.919 million barrels, leaving inventories 16.829 million barrels greater than the five-year average but 2.361 million barrels below year-ago levels. Product stocks have now cumulatively declined 32.884 million barrels since year-end 2010 on a combination of low output and low imports.

Gasoline stocks dropped 5.494 million barrels to 229.214 million barrels amid steady demand and lower imports. Stocks of gasoline were only 6.153 million barrels more than the five-year average and 230,000 barrels greater than year-ago levels.

Gasoline demand was up a slight 30,000 b/d to 9.192 million b/d. That was a high enough level to warrant imports of more than 761,000 b/d for the reporting week, but imports were down 47,000 b/d from the prior week. On a four-week moving average basis, gasoline demand of 9.066 million b/d was 201,000 b/d above the same four weeks of 2010.

Distillate demand surged 509,000 b/d to 4.206 million b/d, with most of the increase concentrated in ultra-low-sulfur diesel (ULSD). As a result, ULSD stocks declined 3.209 million barrels to 108.600 million barrels, with the drop occurring in the Midwest and Gulf Coast as planting season got under way.

Stocks of heating oil decreased 408,000 barrels to 37.607 million barrels. On a four-week moving average, demand for middle distillates of 3.884 million b/d was 153,000 b/d greater than year-ago levels.

U.S.stocks of middle distillates plummeted 3.977 million barrels, leaving inventories only 22.552 million barrels ahead of the five-year average and 5.605 million barrels more than year-ago levels.

Ends --

This analysis and commentary is provided by Linda Rafield, Platts senior oil analyst and editor of the weekly Platts Futures and Derivatives Review, a supplement to Platts Oilgram Price Report.

For more information on crude oil, visit the Platts website.