SIn fall of 2004, while gasoline stocks were rising to unusual levels, distillate stocks were experiencing an unusual decline.  At the end of August, distillate stocks were on the high side before large drops in September and October brought levels to the bottom of the band.
	SThe drops can be traced partly to Hurricane Ivan, which occurred in late September and resulted in reduced refinery input.
		–Refinery data for September and October clearly indicate that refinery input levels were unusually low in those months.
		–Distillate yields were at reasonable levels, but low crude oil inputs kept distillate production depressed, requiring stocks to help meet demand.
	SBut did Ivan keep refinery runs low until mid-November when input picked up enough to build stocks?  Why did gasoline not experience the same drawdown in September and October, and why did gasoline stocks remain so much higher than distillate stocks?  The answer goes back to the international situation and the time of year. Strong gasoline imports were depressing the need for high U.S. refinery run levels.
	SThe situation with Katrina and Rita is very different this year than we saw with Ivan.  The loss of refinery production is much larger than with Ivan.  All the crude oil that can be input to refineries will be run.  Until more refineries are back in production, refinery yields will favor gasoline over distillate since even high gasoline imports will not turn the situation in October.
	SThis means that distillate will not be moved forward again until November and December to recover the ground lost in September and October.   In short, the distillate picture going into winter looks challenging.