Both Distillate Supply and Demand Reached Extraordinary Levels This Winter
Notes:
- This chart shows some critical differences in distillate supply and demand during this winter heating season, in comparison to the past two winters.
- Typically, distillate demand peaks during the winter months, but “new supply” (refinery production and net imports) cannot increase as much, so the remaining supply needed is drawn from inventories. This pattern is evident in each of the past two winter heating seasons.
- This winter, however, the pattern was very different, for several reasons:
- With inventories entering the season at extremely low levels, a “typical” winter stockdraw would have been nearly impossible, particularly in the Northeast, the region most dependent on heating oil.
- Demand reached near-record levels in December, as colder-than-normal temperatures and extremely high natural gas prices pushed more “switchable” demand into distillates.
- Refinery production stayed relatively high, as low stocks of both gasoline and distillates prompted refiners to keep runs as high as possible.
- Imports, normally an important part of winter supply, took on an even greater role, thanks to the availability of substantial volumes from Europe, and particularly Russia.