Analysis: EIA: Gasoline Stocks Swell to Seasonal 6-Yr High


   
Karim Bastati
DTN Analyst

   VIENNA (DTN) -- U.S. gasoline inventory builds aren't slowing, growing more 
than forecast for ten straight weeks and into winter -- the season refiners 
recognize as the weakest for demand due to the least amount of driving that 
happens then.

   The U.S. Energy Information Administration reported on Wednesday (1/14) 
another large build -- 9 million barrels -- in weekly gasoline stocks. At 251 
million bbl, stockpiles now stand at their highest for a week since 2020.  
Beyond that milestone, inventories show an expansion of 3.1% year-on-year and 
were 4.3% above the three-year average.

   DTN's analysis last week highlighted why gasoline inventories had been 
building at such an unusually fast pace. Weekly EIA data suggests that 
record-high driving demand failed to translate into gasoline demand growth amid 
the U.S. car fleet becoming less gasoline-dependent. On a four-week average, 
finished motor gasoline supplied, a proxy for consumption, was perfectly in 
line with year-ago levels. On a cumulative daily average, it was even trailing 
the rate observed in the corresponding week last year.

   At the same time, domestic gasoline production has trended higher in the 
second half of the year, a byproduct of near-maximum refinery utilization due 
to high margins, particularly for middle distillates. A jump in U.S. gasoline 
exports had briefly slowed the stock building, with international demand 
cooling since.

   If current trends prevail, stocks may peak at higher than typical levels. 
Despite softening margins, refiners are still processing more crude oil than a 
year ago, running at close to 95% of operable capacity over the past four 
weeks. Inventories will eventually follow seasonal patterns more closely. For 
now, time spreads in RBOB futures are still incentivizing storage, with the 
contract's time structure in a steeper-than-usual contango for this time of 
year.




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