DOE sees strong distillate imports this winter from Asia: official

Washington (Platts)--2Nov2005

The US Department of Energy expects there to be strong imports into the
country this coming winter from around the world, but most notably from Asia,
Deputy Assistant Secretary Mark Maddox told a House panel Wednesday.

     In prepared remarks for presentation to the Energy and Commerce
Committee, Maddox noted that, "based on our conversation with industry, we
expect that distillates will continue to enter into the US from all over the
world, but especially from Asia."

     DOE's Energy Information Administration earlier Wednesday reported that
distillate imports for the week ended Oct 28 declined by 191,000 b/d
week-on-week to 323,000 b/d. The heating oil portion of distillate imports was
up by 21,000 b/d to 176,000 b/d in the latest survey week.

     Maddox said that as US moves into winter, distillate demand will increase
everywhere, but that higher demand should be offset by an increase in US
distillate supply as refineries continue to come back online after the recent
hurricanes.

     Distillates demand in the US last week was down by 227,000 b/d to
4.066-mil b/d, while the heating oil portion of that figure was down 74,000
b/d week-on-week to 722,000 b/d.

     Maddox said that one factor making the heating oil situation unclear is
that US Gulf of Mexico natural gas supplies were "so thoroughly disrupted" by
the hurricanes that battered the region in August and September.

     "Natural gas and distillates compete in many applications, and in the
case of a diruption in supply for one product, a demand increase for the still
available product can be nearly instantaneous," Maddox noted.

     He also said that crude supply appeared adequate going into the winter.
"We do not foresee shortages [in heating oil] this winter due to shortages of
crude oil," said Maddox.

     Maddox also noted that DOE stand ready to make heating oil available from
Northeast heating oil reserve.

     DOE on Oct 13 said that the Northeast heating oil market officially moved
into a "market dislocation," one of the conditions under which the president
may call for a release of stocks from the 2-mil bbl Northeast Home Heating Oil
Reserve. Despite passing that technical threshold, there has not been a supply
disruption warrenting any release of oil from that reserve.

--Cathy Landry, cathy_landry@platts.com

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