Released on July 30, 2003
(Next Release on August 6, 2003)

Crude Oil Imports Up, Production Down
U.S. crude oil imports reached nearly 10.1 million barrels per day last week, helping U.S. commercial crude oil inventories rise by 1.0 million barrels. Not only did the United States import the first shipments of Iraqi crude oil since May, but U.S. crude oil imports from Nigeria appear to have increased significantly from a relatively low level in the previous week, based on preliminary weekly data. This was expected, as some shipments arrived too late to be included in the data for the week ending July 18 and thus were included in the week ending July 25. With Iraqi crude oil imports arriving once again and a substantial increase in imports from Nigeria, some analysts may have been expecting a slightly larger increase in U.S. crude oil inventories. However, weekly data suggest that domestic crude oil production was down slightly, due in large part to a drop in Alaskan crude oil production. Crude oil production from Alaska, which averaged as high as 2.017 million barrels per day in 1988, has averaged below 1.0 million barrels per day on an annual basis since 2000. Last week’s average production was down even further due to unusually high temperatures on the North Slope, which lowers the efficiency of natural gas compression at the natural gas handling facilities, which in turn reduces the rate of oil and natural gas flowing through the production system. If temperatures along the North Slope return to more normal levels, as is expected, crude oil production from Alaska should return to recent levels.

U.S. commercial crude oil inventories were 277.3 million barrels as of July 25, which is 30.0 million barrels (9.8 percent) less than last year, or 36.9 million barrels (11.8 percent) less than the 5-year average for this time of year. While still substantially below the normal range, crude oil inventories typically decrease during July, August, and even September, as refiners usually use a lot of crude oil in refineries during these months. So any increase in inventories during these months, no matter how small, is notable, as it moves inventories toward more normal levels. That said, U.S. commercial crude oil inventories (Figure 3 in the Weekly Petroleum Status Report), as well as total petroleum inventories (Figure 2 in the Weekly Petroleum Status Report), are still months, not weeks, from returning to their normal ranges.

According to weekly data submissions, last week saw the first influx of Iraqi crude oil since May. This was not entirely unexpected, as the first shipments of crude oil from Iraqi storage tanks took place beginning on June 22, implying arrival at U.S. shores in late July based on typical shipping times from the Mediterranean port at Ceyhan, Turkey. Although the origins of weekly crude oil imports are preliminary and thus not published in detail, we can make general statements based on the data. Data for the week ending July 25 show Iraqi oil reaching U.S. ports at quantities that were not insignificant, albeit much less than the 795,000 barrels per day averaged in 2001 and even less than the 459,000 barrels per day averaged in 2002. With Iraqi crude oil exports continuing, it is likely that this is the beginning of Iraqi crude oil imports consistently arriving here in the United States, although it may be some time before U.S. crude oil imports from Iraq represent one of the top five sources.

U.S. Retail Gasoline Prices Fall
The U.S. average retail price for regular gasoline fell last week for the first time in four weeks, decreasing by 0.8 cent per gallon as of July 28 to reach 151.6 cents per gallon, which is 10.9 cents per gallon higher than a year ago. With crude oil prices fairly stable over the last few weeks, gasoline prices have also stabilized at about 152 cents per gallon since July 14. Prices were down throughout most of the country, with the exception being the Rocky Mountain region, which saw the average price rise by 3.0 cents to end at 157.1 cents per gallon. The West Coast had the largest price decrease, falling by 1.7 cents, but still showed the highest average regional price for regular gasoline at 167.1 cents per gallon. The region with the lowest average price is the Gulf Coast, where prices for regular gasoline averaged 144.1 cents per gallon.

Retail diesel fuel prices decreased slightly last week, inching down by 0.1 cent per gallon as of July 28 to a national average of 143.8 cents per gallon, which is 13.5 cents per gallon higher than a year ago. Retail diesel prices were down throughout most of the nation last week, but an increase of 3.3 cents per gallon in California last week raised prices there to 167.3 cents per gallon, the highest in the country. Gulf Coast retail diesel prices averaged the lowest in the country at 138.7 cents per gallon as of July 28.

Propane Build Surpasses July Average
U.S. inventories of propane surpassed the July average build with last week's 2.1-million-barrel addition that ended the week of July 25 with an estimated 53.7 million barrels in primary storage. With nearly a week remaining in July, U.S. stockholders have already surpassed the 6.7-million-barrel stockbuild averaged over the most recent 5-year period, with inventories increasing by 6.9 million barrels during the first three weeks of July. The above average July build also marks the third consecutive month that U.S. inventories have exhibited an above average build. As such, U.S. inventories have surpassed the average build for the period April through July with 32.1 million barrels, compared with the 5-year average of 29.7 million barrels. Strong imports again were the key factor behind the weekly stockbuild that accounted for 1.0 million barrels of the 2.1-million-barrel weekly gain. East Coast inventories moved higher to reach nearly 4.6 million barrels, the highest weekly gain since the end of May. Regional inventories in the Midwest and Gulf Coast areas reported similar gains measuring about 950 thousand barrels last week. Propylene non-fuel use inventories rose to 3.4 million barrels from the prior week's level of 3.3 million barrels, accounting for 6.3 percent of total propane/propylene inventories, unchanged from last week's share.

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