Slide 4 of 25
Notes:
- Distillate stocks are very low for this time of year. This graph shows East Coast inventories, which at the end of July, were well below the normal band. East Coast stocks are about 35% lower than their 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).
- Stocks were well within the normal range through November 1999, but in December, they dropped below the normal band and have not returned to the band.
- As the normal stock band shows, we typically build distillate stocks during the summer for use during the winter, but strong distillate demand and weak net imports have kept inventories from building at the usual rate.
- As was recently evidenced in the gasoline market, below average stock levels translate to increased potential for price volatility.
