The U.S. Energy Department's weekly inventory release showed another unexpected stockpile addition. As it is, the commodity’s stock remains at levels not seen since the 1930s in the face of weak global consumption. As a result, oil – which was hovering around $110 per barrel just over a year ago – is now struggling to stay above $40. In between, it sunk to a 6½-year low of $38 a barrel.
The report further revealed that refined product inventories – gasoline and distillate – both increased from their previous week levels too. Meanwhile, refiners scaled up their utilization rates.
Analysis of the Data
Crude Oil: The federal government’s EIA report revealed that crude inventories increased by 1.18 million barrels for the week ending Nov 27, 2015, following a rise of 961,000 barrels in the previous week.
The analysts surveyed by Platts – the energy information arm of McGraw-Hill Financial Inc. – had expected crude stocks to go down by 1.2 million barrels. A spike in the level of imports led to the unexpected stockpile build with the world's biggest oil consumer even as refinery usage remained brisk.
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 – were up 428,000 barrels from the previous week’s level to 59.0 million barrels.
Following the tenth successive weekly inventory rise, at 489.42 million barrels, current crude supplies are up 29% from the year-ago period and are near the highest level during this time of the year in 80 years at least.
The crude supply cover was down from 30.5 days in the previous week to 30.0 days. In the year-ago period, the supply cover was 23.7 days.
Gasoline: Supplies of gasoline were up for the third time in as many weeks, as production rose. The nominal 135,000 barrels rise – essentially in line with analysts’ projections – took gasoline stockpiles up to 216.87 million barrels. Following last week’s build, the existing stock of the most widely used petroleum product is 4% higher than the year-earlier level and sits comfortably above the upper limit of the average range.
Distillate: Distillate fuel supplies (including diesel and heating oil) were up 3.05 million barrels last week, much larger than analysts’ expectations for a 100,000 barrels rise in inventory level. The increase in distillate fuel stocks – just the third in 11 weeks – could be attributed to higher imports and production. At 144.42 million barrels, distillate supplies are 24% above the year-ago level and are in the upper half of the average range for this time of the year.
Refinery Rates: Refinery utilization was up 2.5% from the prior week to 94.5%.
About the Weekly Petroleum Status Report
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.
The data from EIA generally acts as a catalyst for crude prices and affect producers, such as Exxon Mobil Corp. XOM, Chevron Corp. CVX and ConocoPhillips COP, and refiners such as Valero Energy Corp. VLO, Phillips 66 PSX and HollyFrontier Corp. HFC.
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