The U.S. Energy Department's weekly inventory release showed an unexpected drop in crude and distillate stockpiles, while gasoline supplies rose for the second straight week. Meanwhile, refiners improved processing rates by 1.5%.
The Energy Information Administration (“EIA”) Petroleum Status Report – which contains data for the previous week ending on Friday, outlines information regarding the weekly change in petroleum inventories held and produced by the U.S., both locally and abroad.
The report provides an overview of the level of reserves and their movements, thereby helping investors understand the demand/supply dynamics of petroleum products. It is an indicator of current oil prices and volatility that affect businesses of companies engaged in the oil and refining industry, such as ExxonMobil (XOM), Chevron Corp. (CVX), ConocoPhillips (COP), Valero (VLO) and Tesoro (TSO).
Crude Oil
The federal government’s EIA report revealed that crude inventories edged down by 15,000 barrels for the week ending May 13, 2011, contrary to expectations of a gain set by analysts who had been surveyed by Platts, the energy information arm of McGraw-Hill Companies Inc. (MHP). A large drop in imports and improved refinery operations led to the dip in stockpile with the world's biggest oil user.
Importantly, crude inventories at the Cushing terminal in Oklahoma – the key delivery hub for U.S. crude futures – came off 1.59 million barrels from last week’s level to 40.02 million barrels. It reached an all-time high of 41.90 million barrels earlier this year.
At 370.31 million barrels, current crude supplies are 2.1% higher than the year-earlier level and are above the upper limit of the average for this time of the year. The crude supply cover was down marginally from 26.3 days in the previous week to 26.2 days. In the year-ago period, the supply cover was 24.0 days.
Gasoline
Supplies of gasoline increased for the second successive week on the back of production increase even as demand edged up and imports plunged. The 119,000 barrel-build – lower than projections – took gasoline stockpiles up to 205.94 million barrels. Current inventory levels are 7.2% below the year-earlier levels and are in the lower half of the average range.
The current build-up in gasoline stockpiles follows an eleven-week trend of continuous decline during which supplies fell by more than 36 million barrels since February 11, when they reached their highest in almost 21 years.
Distillate
Distillate fuel inventories (including diesel and heating oil) were down by 1.16 million barrels last week, as against analyst expectations for a stock build-up. The decrease in distillate fuel supplies can be attributed to a fall in imports and production, partially offset by lower demand.
At 143.13 million barrels, distillate supplies were 6.4% less than the year-ago level but are in the upper boundary of the average range for this time of the year.
Refinery Rates
Refinery utilization was up 1.5% from the prior week to 83.2%. Analysts were expecting the refinery run rate to increase 0.28% to 81.98%.
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