Released on January 16, 2002
(Next Release on January 24, 2002)

Crude Oil Inputs Remain High For This Time of Year
Although U.S. crude oil refinery inputs have now averaged below 15 million barrels per day for 6 weeks in a row, they continue to be higher than average for this time of year. With last year’s crude oil inputs unusually high, it may appear that recent crude oil refinery inputs have been low by comparison (see U.S. Crude Oil Refinery Inputs table and chart on the crude oil page). However, considering how high product inventories have been in recent weeks, crude oil inputs are surprisingly high. Crude oil refinery inputs in the Gulf Coast (PADD III), the major refining center in the world, averaged 7.4 million barrels per day last week, the highest ever weekly average in January. If crude oil refinery inputs over the next 3 weeks average 14.74 million barrels per day, which is about 0.2 million barrels per day less than has been averaged so far in January, a new January record will have been set. If U.S. crude oil refinery inputs remain relatively strong while OPEC and major non-OPEC producing countries reduce the global supply of crude oil, there will likely be some upward pressure on crude oil prices, especially in the United States.

U.S. Oil Demand Showing Underlying Strength
Although total petroleum demand over the last 4 weeks was about 0.8 million barrels per day less than during the comparable period last year, distillate fuel and residual fuel oil combined (1.0 million barrels per day) account for even more than the decline in total petroleum demand. However, the decline in these two fuels can be easily explained by the large amount of fuel switching that seemingly occurred at this time last year, as cold weather and high natural gas prices encouraged unusually high demand for distillate fuel and residual fuel. Thus, comparisons to year-ago demand levels are somewhat misleading and may belie underlying strength in oil demand. Even with motor gasoline demand over the last 2 weeks down considerably from previous levels, the 4-week average of 8.6 million barrels per day is 1.7 percent above the amount in the same period a year ago. So considering that natural gas prices are no longer high enough to encourage switching into oil, that weather has been warmer than year-ago levels, that jet fuel demand still remains well below last year's level as a result of reduced air traffic following the September 11 attacks, and that the United States is in the midst of a recession, one could argue that petroleum demand is surprisingly strong under these conditions.

U.S. Commercial Oil Inventories Decreased Slightly Last Week
U.S. commercial oil inventories (excluding inventories in the Strategic Petroleum Reserve) decreased last week, albeit by only 0.2 million barrels, to continue a downward trend that has been in place since the week ending December 7, and that was just briefly interrupted in the week ending January 4. Most noteworthy was the change in distillate fuel inventories, (see U.S. Distillate Stock chart on the distillate page)which decreased by a relatively benign 0.3 million barrels. However, what was interesting was that a 3.1 million barrel draw in high-sulfur distillate fuel (often referred to as heating oil), was nearly offset by a 2.9 million barrel increase in low-sulfur distillate fuel (often referred to as diesel fuel). This puts low-sulfur distillate fuel inventories above 80 million barrels for the first time ever. With motor gasoline inventories also increasing by a significant amount last week (2.8 million barrels), it appears that refiners may be taking advantage of relatively low crude oil prices in order to stock up on products that may be sold later on at higher prices, as seasonal increases in gasoline and diesel demand kick in during the Spring and Summer. Counteracting increases in crude oil, gasoline, and jet fuel inventories, were decreases in the aforementioned distillate fuel, residual fuel, unfinished oils, and "other oils", which includes a 4.2 million barrel draw in propane.

Crude Oil Imports Above Average Levels for January
At 8.5 million barrels per day, U.S. crude oil imports over the last 4 weeks have averaged more than 6 percent below the comparable period last year. However, they remain above the 8.2 million barrels that has been averaged in January over recent years (1998-2000), excluding last year's high level. As announced pledges to cut oil supply over the first half of this year translate into actual reductions in the amount of crude oil available globally, it will be interesting to see if crude oil imports will remain relatively strong.

Most Retail Petroleum Product Prices Fell Slightly Last Week
The national average retail regular gasoline price dipped slightly to 111.1 cents per gallon on January 14, 2002, down 0.1 cent per gallon from last week and 36.3 cents per gallon lower than a year ago. The national average retail diesel fuel price fell for a second straight week, reaching 115.9 cents per gallon on January 14, 2002. This was 0.9 cent per gallon less than last week and 35.0 cents per gallon lower than a year ago. Residential heating oil prices were also down slightly over the past week, as the average on January 14, 2002, stood at 116.5 cents per gallon, a 0.3 cent decrease from the January 7 mark of 116.8 cents per gallon. Residential propane prices were flat over the past week, as the average on January 14, 2002, remained unchanged at 113.3 cents per gallon. Both the residential heating oil and propane average price were well below year-ago prices.