|SResidual fuel oil inventories climbed during
the winter of 2003-2004 in both Europe and North America, while remaining
flat in OECD Asia.
|SIn 2004, European residual fuel inventories
built over the summer, but were drawn down by the end of December.
|SU.S. residual fuel inventories began 2004
at levels higher than in 2003, but declined through much of the year until
fall, when a single-month increase in November brought them back up, before
they continued to decline again.
|SA large contributor to that U.S. stock
build in November was a falloff in residual fuel exports, which points to
other factors that were affecting Atlantic Basin residual fuel oil balances
during the fall months. For example,
tanker rates were very high in the fall, which would have reduced the incentive to move product outside the
region to areas such as Asia.
|SIn summary, even with increased production of
residual fuel oil due to increased throughputs of crude oil, residual fuel oil stocks
do not show the kind of build that would indicate a flood of residual fuel
oil into the market.
|SStill, one could argue that perhaps this
aggregate data is not sensitive enough to pick up the marginal impacts of the
shift in heavy crude oils into the market.
But price, which is set by marginal players, should give us more