The U.S. Energy Department's weekly inventory release showed that crude stockpiles fell sharply to reach their lowest level since January, while gasoline stocks added to their supplies. The data further revealed that U.S. distillate stocks fell by a modest 874,000 barrels. Meanwhile, refiners improved processing rates by 1.3%.
The Energy Information Administration ("EIA") Petroleum Status Report – which contains data for the previous week ending 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 shrank by 7.34 million barrels for the week ending September 16, 2011, the largest weekly drop this year.
Analysts surveyed by Platts, the energy information arm of McGraw-Hill Companies Inc. (MHP), had expected oil stocks to go down some 1.0 million barrels. A drop in imports (to their lowest level since April), improved refinery operations, and the lingering impact of production shutdowns caused by the Tropical Storm Lee led to the dip in stockpile with the world's biggest oil consumer.
In particular, crude inventories at the Cushing terminal in Oklahoma – the key delivery hub for U.S. crude futures – came off 231,000 barrels from last week’s level to 32.0 million barrels, its lowest level since early November 2010. Stocks reached an all-time high of 41.90 million barrels earlier this year.
At 339.05 million barrels, current crude supplies are 5.4% lower than the year-earlier level, but are in the upper limit of the average for this time of the year. The crude supply cover was down from 22.5 days in the previous week to 22.2 days. In the year-ago period, the supply cover was 24.0 days.
Gasoline
Supplies of gasoline increased for the fourth time in five weeks on the back of higher import levels, partially offset by lower production. The 3.30 million barrels-build – more than projections – took gasoline stockpiles up to 214.08 million barrels. The existing inventory level is 5.3% below the year-earlier levels, but is above the upper half of the average range.
Distillate
Distillate fuel inventories (including diesel and heating oil) were down by 874,000 barrels last week, contrary to analyst expectations for a build. The decrease in distillate fuel supplies can be attributed to stronger demand and lower production. At 157.61 million barrels, distillate supplies are 9.9% lower than the year-ago level, but are in the upper boundary of the average range at this time of the year.
Refinery Rates
Refinery utilization was up 1.3% from the prior week to 88.3%. Analysts were expecting the refinery run rate to decrease 0.5% to 86.5%.
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