World oil stocks follow a
seasonal pattern in which they are typically drawn down rapidly in the middle of
the winter and re-built rapidly in the spring, creating a tendency for world oil
prices to be strongest in the fall and weakest in the spring. This stock
seasonality stems from world oil demand being much more seasonal than world
production. Stock swings are most pronounced in those Northern Hemisphere
heating fuels -- heating oil, propane, and kerosene -- that drive world oil
demand seasonality. Crude stocks are also seasonal, being drawn when
refiners push their runs up to peak levels and built when refiners schedule
maintenance at their plants. But, since Asia’s refining system has
its peak output in the winter, with maintenance scheduled for the summer, while
North America’s system is summer-peaking, with maintenance scheduled for late
winter or early fall, much of the regional seasonality in crude oil stocks
cancels out at the world level. Thus, global product stocks tend to be much more
variable than crude oil stocks. With refineries growing more flexible and
demand becoming less seasonal, stocks are becoming less seasonal too.