|SIn 2004, we saw the gasoline and distillate
market balances diverge, with distillate tightening while gasoline
inventories moved from low to high levels.
|SGasoline imports remained strong in 2005. On the other hand, the distillate price
premium over gasoline caused refiners to increase distillate yield and move
toward a better product balance.
Distillate stocks were at a comfortable level at the end of August,
looking like we were on the way to being well set for the winter fuel season.
|SThen hurricanes Katrina and Rita have caused
an unprecented level of refinery outages. We are now seeing distillate stock
fall as we speak -- 5millon barrel
decline in distillate stocks last week, possibly another 4 million this week,
another 3 million barrels next week and the situation is transformed from a
comfortable to an uncomfortable situation.