Released on May 29, 2003
(Next Release on June 4, 2003)

Start Your Engines
Gasoline demand (or more accurately, the amount of gasoline delivered into the U.S. gasoline market) got a jump start on the unofficial beginning of the peak summer driving season, averaging 9.3 million barrels per day for the week leading up to the Memorial Day weekend. This level of gasoline demand represents the highest weekly average since the week ending November 1, 2002, and is more than 600,000 barrels per day more than averaged during the week leading up to Memorial Day last year. This is relatively surprising, as the moving four-week average demand levels over the last several weeks have been lower than year-ago levels. A weak economy, consumer tax-like effects of high natural gas prices, and inclement weather along much of the eastern portion of the United States have been cited as factors underlying unexpectedly low gasoline demand lately. For example, recently released monthly data revealed that gasoline demand in March was 0.8 percent less than in March 2002, and weekly data since then has shown a similar pattern. With presumably improving weather and currently lower gasoline prices, it will be interesting to see if the higher level of gasoline demand last week was a one-week phenomenon or an early start to the peak summer driving season.

Imports from Iraq Continue to Arrive in Small Quantities
Although the origins of weekly crude oil imports are preliminary and thus not published, it appears that only one small shipment of Iraqi crude oil arrived on the Gulf Coast during the week ending May 23. Although it has been about 2 months since the last Iraqi oil was shipped, this company verified that it did receive a small shipment of Iraqi crude oil. Once again, this is likely to be the last Iraqi crude oil imported to the United States until at least a month following the resumption of Iraqi oil exports. There are reports that Iraq may begin to export a small amount of oil currently in storage within the next few weeks. However, at the time of this report, it is still very unclear when Iraqi oil exports will resume in significant volumes. In the meantime, crude oil imports held above 10 million barrels per day during the week ending May 23, even with hardly any Iraqi imports, mainly due to large volumes arriving from Saudi Arabia, Mexico, and Nigeria.

U.S. Retail Gasoline Prices Decrease by a Penny
The U.S. average retail price for regular gasoline fell last week for the ninth time in ten weeks. Prices decreased by 1.1 cents per gallon as of May 26 to reach 148.7 cents per gallon, which is 10.0 cents per gallon higher than a year ago. Since March 17, the average price for regular gasoline has declined by 24.1 cents per gallon. This price decrease primarily reflects crude oil prices that remain lower than their peak price in March. Prices were down throughout the nation last week, with prices dropping the most on the West Coast, where prices fell 3.6 cents to hit 169.9 cents per gallon. The region with the lowest price is the Gulf Coast, where prices for regular gasoline averaged stayed flat at 136.9 cents per gallon. California prices continued to drop, decreasing by 4.6 cents to 176.3 cents per gallon, and are now 38.2 cents per gallon lower than the peak price reached on March 17.

Retail diesel fuel prices decreased for the eleventh consecutive week, falling 0.9 cent per gallon as of May 26 to a national average of 143.4 cents per gallon, which is still 12.6 cents per gallon higher than a year ago. Diesel fuel prices continue to fall as market conditions improve. Retail diesel prices were mostly down throughout the nation last week, with the Rocky Mountains decreasing by 2.2 cents. The region with the lowest price is the Gulf Coast, where prices for diesel averaged 136.9 cents per gallon, while the region with the highest price is New England, where prices averaged 157.6 cents per gallon on May 26.

Propane Inventories Post Moderate Gain
U.S. inventories of propane moved 1.5 million barrels higher last week to an estimated 30.4 million barrels as of May 23, 2003. Although the build was slightly smaller compared with those over the past several weeks, the weekly stockbuild nonetheless continued the momentum gained earlier in the month that may well propel the monthly build to match or even exceed the 5-year average of 9.3 million barrels. Regional inventories remained relatively flat in the East Coast last week, while the Midwest region posted a modest 0.2-million-barrel gain during this same period. The Gulf Coast continued its recent trend of providing the largest gain with a weekly stockbuild that measured nearly 1.2 million barrels. East Coast inventories moved within the upper limit of the average range last week, while at the same time inventories in the Midwest and Gulf Coast regions remained below their respective average ranges. Inventories of propylene for non-fuel use continued higher last week to 1.9 million barrels, accounting for 6.3 percent share of total propane/propylene inventories compared with 6.0 percent the prior week. This was due to the gain in total propane/propylene inventories lagging the gain in propylene for non-fuel use inventories.

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