Slide 7 of 18
Notes:
- Distillate stocks are normally built during the summer for use during the winter as shown by the normal band.
- Currently, stocks are very low for this time of year. This graph shows East Coast inventories, which at the end of August, were well below the normal band (over 9 million barrels or 19% below the low end of the band). The East Coast is about 31% lower than its 10-year average level for this time of year.
- We focus on the East Coast (PADD 1 ) because this a region in which heating oil is a major winter fuel. Furthermore, the East Coast consumes almost 2/3 of the nation’s heating oil (high sulfur distillate).
- December 1999 was the turning point. Stocks were well within the normal range through November 1999, but in December, they dropped below the normal band and have not returned to normal levels since.
- As was evidenced this summer in the gasoline market, and last January and February in the Northeast heating oil market, below average stock levels translate to increased potential for price volatility.
