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Wednesday, September 15, 2010

Weekly DOE Crude & Product Inventory Analysis

· Crude inventories draw in line with expectations – Crude oil inventories decreased 2.5 mmbbls last week, right in line with market expectations (per Bloomberg). Crude oil inventories are now sitting at 357.4 mmbbls, which is 7.4% above last year and 13.4% above the five-year average. Crude oil was trading US$1.00/bbl lower to US$75.80/bb following the announcement.

· Gasoline inventories draw in line with expectations – Gasoline inventories were in line with market expectations, falling 0.7 mmbbls versus expectations of a 0.6 mmbbls draw (per Bloomberg). Inventories of gasoline are now sitting at 224.5 mmbbls, which is 8.1% above last year and 13.8% above the five-year average.

· Distillate inventories move lower – Inventories of distillates decreased 0.3 mmbbls last week, compared with market expectations for a 0.7 mmbbls build (per Bloomberg). Distillate inventories are now sitting at 174.5 mmbbls, which is 4.0% above last year and 21.9% above the five-year average.

· Refinery utilization edges higher – Refinery utilization decreased 0.6% last week to 87.6% which is 0.7% above last year and equals the five-year average.

· Enbridge Line 6A spill – Yesterday (Sept. 14) Enbridge announced that it will be allowed to restart Line 6A by the end of this week according to the Pipeline and Hazardous Materials Safety Administration. Line 6A has a capacity of approximately 670,000 bpd and is part of Enbridge’s U.S. Mainline (Lakehead System). The spill occurred in Romeoville, Illinois and was reported September 9. Given the news on the timing of crude to begin flowing through Line 6A, contango for WTI crude has widened out as crude is expected to once again bid for storage.

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