US oil inventories drop in February

United States oil inventories registered a sizeable drop in February after demand for all major oil products rose, while imports fell to their lowest levels in more than three years, data compiled by the American Petroleum Institute (API) show.

“It has been more than a year since we’ve seen a simultaneous increase in deliveries for all major products,” said Ron Planting, API’s manager of statistical information and analysis.

Inventories of all major product stocks, except kerosene jet fuel, posted declines. Total stocks of major products, including gasoline, distillate, residual fuel oil, and jet fuel, were down 33.3 million barrels compared to last February, though they remained slightly above the five-year February average, according to API's Monthly Statistical Report covering February 2007.

Petroleum deliveries, a proxy for demand, were up a strong 3.5 percent in February over year-ago levels as demand grew for all major products. Gasoline demand rose 4.5 percent year-on-year while distillate demand climbed 3.2 percent and jet fuel rose more than five percent.

Residual fuel oil demand, which registered a dramatic 27 percent year-on-year decline in January, posted its first year-on-year gains in 11 months amid very cold February temperatures.

API said the nation’s crude oil inventories fell three percent from January levels to stand at 318.4 million barrels, 6.8 percent below February 2006 levels, the biggest year-on-year decline since June 2003.

In an unusual month-to-month decline for this time of year, US petroleum imports were about six percent below year-ago levels. Crude imports averaged just below 9.6 million barrels per day, down 3 percent from February 2006. Total product imports stood 6.1 percent below January levels to average 2.9 million barrels per day. Only imports of jet fuel registered a month-to-month gain.

US refinery activity, as measured by crude oil input, was down 1.3 percent from a year-ago and 2.8 percent below January 2007. Scheduled maintenance and preparation for a switch to summer-blend fuels pushed capacity utilization to fall to 85.4 percent, down from February 2006’s 86.5 percent average. Even so, gasoline production was at an all-time high for February.

US crude oil production averaged more than 5.2 million barrels per day, down 0.4 percent below January 2007 levels but 2.0 percent over February 2006 levels. Production in the lower 48 states rose slightly from month-earlier levels to just below 4.5 million barrels per day. Alaskan production averaged 749,000 barrels per day, down nine percent from February 2006.

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