The U.S. Energy Department's weekly inventory release showed an unexpected increase in crude inventories on the back of soaring imports and dwindling product demand, while gasoline supplies rose for the second straight week. The agency’s report further revealed that distillate stocks posted a significantly larger-than-expected build. Meanwhile, refinery utilization rate was up by 0.6%.
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 Corp. (XOM), Chevron Corp. (CVX), ConocoPhillips (COP), Valero Energy Corp. (VLO) and Tesoro Corp. (TSO).
Analysis of the Data
Crude Oil: The federal government’s EIA report revealed that crude inventories rose by 4.96 million barrels for the week ending January 6, 2012, after jumping by 2.21 million barrels last week.
Analysts surveyed by Platts, the energy information arm of McGraw-Hill Companies Inc. (MHP), had expected oil stocks to go down some 1 million barrels. Weak product demand and surging imports – currently at their 18-month high level – led to the stockpile build-up with the world's biggest oil consumer.
However, crude inventories at the Cushing terminal in Oklahoma – the key delivery hub for U.S. crude futures – came off 191,000 barrels from last week’s level to 29.1 million barrels, the lowest level since November 13, 2009. Stocks reached an all-time high of 41.90 million barrels in April last year.
At 334.65 million barrels, current crude supplies are 0.5% higher than the year-earlier level, and are in the upper limit of the average for this time of the year. The crude supply cover was up from 22.5 days in the previous week to 22.7 days. In the year-ago period, the supply cover was 22.4 days.
Gasoline: Supplies of gasoline increased for the second consecutive week as demand dropped, partially offset by a fall in imports. The 3.61 million barrels-build – more than double that of projections – took gasoline stockpiles up to 223.80 million barrels. The existing inventory level of the most widely used petroleum product is 0.3% above the year-earlier levels and is over the upper limit of the average range.
Distillate: Distillate fuel inventories (including diesel and heating oil) were up by 3.99 million barrels last week, comfortably outpacing analyst expectations for a 1.35 million barrels increase. The rise in distillate fuel supplies – for the third consecutive week – could be attributed to tepid demand, whose effect was partly nullified by lower imports.
At 147.56 million barrels, distillate supplies are 10.4% below the year-ago level and are in the middle of the average range for this time of the year.
Refinery Rates: Refinery utilization was up 0.6% from the prior week at 85.6%. Analysts were expecting the refinery run rate to improve 0.2% to 85.2%.
CONOCOPHILLIPS (COP): Free Stock Analysis Report
CHEVRON CORP (CVX): Free Stock Analysis Report
MCGRAW-HILL COS (MHP): Free Stock Analysis Report
TESORO CORP (TSO): Free Stock Analysis Report
VALERO ENERGY (VLO): Free Stock Analysis Report
EXXON MOBIL CRP (XOM): Free Stock Analysis Report
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