The U.S. Energy Department's weekly inventory release showed that crude stockpiles fell sharply, as Hurricane Isaac shut down most of the Gulf of Mexico production. The report further revealed that within the ‘refined products’ category, gasoline stocks dropped, while distillate supplies were up from the week-ago levels. Meanwhile, refiners were forced to pull back their utilization rates by 5.1% on the back of hurricane-related disruptions.
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 fell by 7.43 million barrels for the week ending August 31, 2012, following a jump of 3.78 million barrels in the previous week.
Analysts surveyed by Platts, the energy information arm of McGraw-Hill Companies Inc. (MHP), had expected oil stocks to go down some 5 million barrels. Hurricane Isaac-related shutdowns in the Gulf of Mexico production facilities and import terminals led to the stockpile drawdown 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 traded on the New York Mercantile Exchange – edged up by 94,000 barrels from the previous week’s level to 44.92 million barrels. Stocks are currently just under the all-time high of 47.78 million barrels reached in June.
At 357.10 million barrels, current crude supplies are 1.1% above the year-earlier level, and are near the upper limit of the average for this time of the year. The crude supply cover was down marginally from 23.5 days in the previous week to 23.4 days. In the year-ago period, the supply cover was 22.8 days.
Gasoline: Supplies of gasoline decreased for the sixth time in as many weeks as domestic consumption improved 1.2% to 9.18 million barrels a day. This was partially offset by higher production and imports.
The 2.33 million barrels drop – below the analyst projections – took gasoline stockpiles down to 198.89 million barrels. As a result of this decrease, the existing inventory level of the most widely used petroleum product is now 4.7% off the year-earlier levels and is in the lower limit of the average range.
Distillate: Distillate fuel supplies (including diesel and heating oil) rose by 993,000 barrels last week, contrary to analyst expectations for a 1.5 million barrels decline in inventory level. The rise in distillate fuel stocks – the fourth in as many weeks – could be attributed to weaker demand.
At 127.08 million barrels, distillate supplies are 18.9% below the year-ago level and are under the lower limit of the average range for this time of the year.
Refinery Rates: Refinery utilization tumbled 5.1% from the prior week to 86.1%, as Hurricane Isaac forced several facilities to shut down or scale back operations.
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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