Surprise Build in Gasoline Stocks (COP) (CVX) (MHP) (XOM)

Zacks

The U.S. Energy Department's weekly inventory release showed that gasoline stockpiles increased unexpectedly, as refiners scaled up their utilization rates in the face of muted demand. The report further revealed that crude inventories jumped to hit their highest level since 1990, while distillate supplies were down from the week-ago levels.

The Energy Information Administration (EIA) Petroleum Status Report, containing data of 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 the businesses of the companies engaged in the oil and refining industry.

Analysis of the Data

Crude Oil: The federal government’s EIA report revealed that crude inventories edged up by 250,000 barrels for the week ending Apr 05, 2013, following a climb of 2.71 million barrels in the previous week.

The analysts surveyed by Platts – the energy information arm of McGraw-Hill Companies Inc. (MHP), had expected crude stocks to go up some 1.4 million barrels. Strong domestic production led to the modest stockpile build-up with the world's biggest oil consumer even as imports fell and refinery utilization rates continued to improve.

In particular, crude inventories at the Cushing terminal in Oklahoma – the key delivery hub for U.S. crude futures traded on the New York Mercantile Exchange – was up 889,000 barrels from the previous week’s level to 50.07 million barrels. Stocks are currently just under the all-time high of 51.86 million barrels reached in January.

Following the weekly inventory increase, at 388.87 million barrels, current crude supplies are 6.5% above the year-earlier level, and comfortably exceed the upper limit of the average for this time of the year. The crude supply cover was down from 26.6 days in the previous week to 26.1 days. In the year-ago period, the supply cover was 25.2 days.

Gasoline: Supplies of gasoline were up for the first time in 9 weeks, as domestic consumption weakened and imports jumped. This was partially offset by lower production.

The 1.70 million barrels gain – contrary to analysts’ projections for a 1.8 million-barrel decrease in supply level – took gasoline stockpiles up to 222.36 million barrels. Following this build, the existing inventory level of the most widely used petroleum product is 2.2% higher than the year-earlier level and is in the top half of the average range.

Distillate: Distillate fuel supplies (including diesel and heating oil) were down 169,000 barrels last week, significantly below analysts’ expectations for a 1.8 million barrels drop in inventory level. The decrease in distillate fuel stocks – the fifth in 6 weeks – could be attributed to a decline in the ultra-low sulfur diesel (ULSD) category, partially offset by weaker demand and higher production.

At 112.82 million barrels, distillate supplies are 14.5% below the year-ago level and are in the lower limit of the average range for this time of the year.

Refinery Rates: Refinery utilization was up 0.5% from the prior week to 86.8%. The analysts were expecting the refinery run rate to increase 0.3% to 86.6%.

Zacks Rank

A bullish data from the EIA generally acts as a positive catalyst for crude prices and buoy producers, such as Exxon Mobil Corp. (XOM), Chevron Corp. (CVX) and ConocoPhillips (COP). With an improvement in the companies’ ability to generate positive earnings surprises, they can then move higher from their current Zacks Rank #3 (Hold).

CONOCOPHILLIPS (COP): Free Stock Analysis Report

CHEVRON CORP (CVX): Free Stock Analysis Report

MCGRAW-HILL COS (MHP): Free Stock Analysis Report

EXXON MOBIL CRP (XOM): Free Stock Analysis Report

To read this article on Zacks.com click here.

Get all Zacks Research Reports and be alerted to fast-breaking buy and sell opportunities every trading day.

Be the first to comment

Leave a Reply