According to the US Energy Information Administration (EIA), inventories of distillate fuel oil in the US East Coast are higher than they have been in the previous three years, reaching 59 million bbls on 18 September. Most of the recent increase is in the Central Atlantic region, but inventories are also higher in New England and in the Lower Atlantic, compared with previous late-September levels.
Heating oil, a type of distillate fuel oil, is used as a space heating or water heating fuel in about eight million U.S. households, almost all of which are in the Northeast. In the Northeast, 27% of households use heating oil for space heating, while nationwide only 6% of households use heating oil, based on data from EIA's latest Residential Energy Consumption Survey.
The East Coast region (Petroleum Administration for Defense District, or PADD 1) generally holds about 30% to 50% of the nation's distillate fuel oil inventory. Naturally, these inventory levels fluctuate seasonally, typically drawing down in winter months and building up in summer months. In the past three years, East Coast inventories had been relatively low compared to the previous five-year average, reflecting a long-term decline in heating oil demand and the increasing availability of imported supply from the global market. Recently, the combination of increased shipments from the Gulf Coast, higher refinery runs, and imports have boosted East Coast distillate inventories to 5.4 million bbls above the five-year average for the week ending 11 September, the highest since 2011.
Before last winter, five other states joined New York in implementing stricter sulfur limits on home heating oil, contributing further to changes in the type of distillate fuel oil held in Northeast inventories. Historically, distillate fuel oil with a sulfur content greater than 500 ppm made up 60%–70% of inventories in the Central Atlantic region (PADD 1B).
As stricter sulfur limits were enacted and the New York Mercantile Exchange (Nymex) changed to a lower sulfur specification contract, the sulfur content of inventories also declined. Currently 80% of PADD 1B inventories have a sulfur content of 15 ppm or lower.
In addition, new regulations that limit marine fuel sulfur levels in certain coastal waters to 1000 ppm began in January 2015. In order to comply, marine vessels are switching to lower-sulfur distillate fuel, installing emissions controls and other options, but the effect on distillate fuel demand is relatively small.
Edited from press release by Angharad Lock
Read the article online at: https://www.hydrocarbonengineering.com/refining/28092015/eia-east-coast-distillate-fuel-oil-inventories-higher-than-in-recent-years-1496/