API says gasoline supplies still tight

The American Petroleum Institute warned Wednesday that, although prices of gasoline in the upper Midwest have returned to normal levels, supplies remain tight across the US. API Pres. warned that, as long as that the tight supply-demand balance persists, problems in industry operations may cause price volatility.


Washington, DC�The American Petroleum Institute warned Wednesday that, although prices of gasoline in the upper Midwest have returned to normal levels, supplies remain tight across the US.

API Pres. Red Cavaney said US tax, regulatory, and lands access policies have "allowed our energy infrastructure to lag behind economic growth. The capacity that industry has now is very close to aggregate demand."

For instance, Cavaney said refinery utilization is 99% on the East Coast and 98% in the Midwest. Overall US refinery utilization was 95%.

He said that, as long as that the tight supply-demand balance persists, problems in industry operations may cause price volatility.

First half
API said, in the first half of 2000, higher product prices contributed to the first drop in US petroleum deliveries in 5 years.

"The more expensive crude oil imports of 8.568 million b/d declined nearly 3% compared to the first half of 1999," said API. "Still, the US remained heavily reliant on foreign oil, which amounted to 56% of domestic needs, near the all-time high of 57% set in 1998."

API said, for the first time in 5 years, first half petroleum deliveries, a key demand indicator, dropped about 1% compared to the first 6 months of 1999. Total domestic deliveries last month of 19.156 million b/d were 3.4% lower than in June 1999.

It said higher prices also affected gasoline deliveries, which dropped 3.9% to 8.536 million b/d last month compared to June 1999. But the easing of transitional reformulated gasoline supply problems in the upper Midwest pushed retail prices down.

API warned, however, that actual June deliveries "may not be a reliable measure of the impact of higher prices on actual consumption, which we believe could turn out to be a bit less" than the nearly 4% June decrease.

Deliveries of high-sulfur distillate fuel, used for home and commercial heating, jumped 13.3% to 1.011 million b/d compared with June 1999. Total distillate deliveries in the first 6 months were 2.5% above last year.

API said distillate stocks at the end of June were 104 million bbl, a 21.5% drop compared to June 1999. Distillate stocks rose 1.4% in June vs. May, and API says refiners make 90% of the distillate used for heating during the winter months.

Supplies
US crude production was 5.869 million b/d in the first half, a 50-year low. Oil output is also down 40% from its 1970 peak. Compared to June 1999, last month's production was up 1.2%.

Gas liquids output was up 5.4% at 1.975 million b/d in June and up 11.1% in the first half.

Meanwhile, imports of oil and products were down 1.6% in June at 10.977 million b/d, and down 2.9% in the first half.

Compared with June 1999, gasoline production was down 0.2% at 8.384 million b/d, distillate up 4.7% at 3.534 million, and kerosine jet fuel up 4.2% at 1.605 million b/d.

Crude stocks were down 12.1% at 291.6 million bbl in June, gasoline stocks up 2.4% at 207.7 million, and kerosine jet fuel stocks down 2.8% at 44.4 million. Total stocks were 971.6 million bbl at the end of the first half, off 9% from 1999 but 19.4 million bbl, or 2%, higher since May.

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