Analysis: EIA Sees Distillate Stocks Plunge to 23-Yr Low


   
Karim Bastati
DTN Analyst

   VIENNA (DTN) -- U.S. distillate fuel oil stockpiles have slumped to the 
lowest in 23 years, Energy Information Administration data showed Thursday 
(5/28). Record-high diesel exports amid the ongoing Middle East supply 
disruption have drawn down distillate fuel oil inventories to 100.8 million bbl 
in the week ending May 22.

   The loss of millions of barrels per day of diesel flows from the Persian 
Gulf, and a global refining slump resulting from the sudden absence of more 
than 10 million bpd of crude oil supply had buyers worldwide increasingly turn 
to the U.S. in a scramble to source alternatives. Distillate fuel oil exports 
soared from 1.05 million bpd in mid-March to nearly 1.6 million bpd throughout 
April, and peaked at an unprecedented 1.86 million bpd in the week ending May 
1. Over the past four weeks, they averaged just shy of 1.64 million bpd, up 
22.8% year-on-year and nearly 34% higher than in March.

   Inventories have consequently receded more than twice as fast as typical for 
the season. Since exports picked up the pace some nine weeks ago, nationwide 
distillate fuel oil stockpiles have dwindled by 19.14 million bbl, or 16%. In 
April alone, they drew at a pace of 507,000 bpd, compared to the five-year 
average rate of 206,000 bpd.

   U.S. diesel wasn't the only fuel with high international demand. Total 
refined product exports clocked in at 8.08 million bpd, last week, and over the 
last four weeks averaged 7.68 million bpd, nearly 1 million bpd more than in 
the comparable time span in 2025. The strong pull onto the export market drove 
combined commercial inventories of gasoline, diesel, fuel oil and other oils 5% 
below year-ago levels. Total petroleum stocks, which include record-high 
propane inventories up nearly 50% year-on-year, were down 2.4% from last year.

   Domestic diesel and fuel oil demand is typically lowest in the summer, 
providing some respite to fast depleting inventories. Diesel stocks can cover 
just over 28 days of current demand, similar to the situation at this time last 
year. Inventories typically rise in June as a byproduct of low demand and 
refiners running hard to meet domestic gasoline demand. Were the Middle East 
supply disruption to persist over the summer, the seasonal rebuilding could 
take place at a much slower pace, leaving inventories dangerously low heading 
into the winter.

    




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