The U.S. Energy Department's weekly inventory release showed an unexpected increase in crude stockpiles, while gasoline supplies rose for the third straight week. However, the distillate numbers were quite bullish with inventories dropping sharply. Meanwhile, refiners improved processing rates to their highest level since January.
The Energy Information Administration (EIA) Petroleum Status Report – which contains data for the previous week ending on 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 rose by 616,000 barrels for the week ending May 20, 2011, contrary to expectations of a drawdown set by analysts who had been surveyed by Platts, the energy information arm of McGraw-Hill Companies Inc. (MHP). A surge in imports led to the stockpile build-up with the world's biggest oil user, even as refinery operations improved.
In particular, crude inventories at the Cushing terminal in Oklahoma – the key delivery hub for U.S. crude futures – edged up 56,000 barrels from last week’s level to 40.08 million barrels. It reached an all-time high of 41.90 million barrels earlier this year.
At 370.93 million barrels, current crude supplies are 1.6% higher than the year-earlier level and are above the upper limit of the average for this time of the year. The crude supply cover was down from 26.2 days in the previous week to 25.9 days. In the year-ago period, the supply cover was 24.2 days.
Gasoline
Supplies of gasoline increased for the third successive week on the back of a healthy rise in import levels, supported by production gains and lower demand. The 3.79 million barrel-build – much higher than projections – took gasoline stockpiles up to 209.73 million barrels. The current inventory level is 5.4% below the year-earlier levels and are in the lower half of the average range.
The current build-up in gasoline stockpiles follows an eleven-week trend (from February 11 to April 29) of continuous decline during which supplies fell by more than 36 million barrels.
Distillate
Distillate fuel inventories (including diesel and heating oil) were down by 2.04 million barrels last week, as against analyst expectations for a stock build-up. The decrease in distillate fuel supplies can be attributed to a fall in imports and higher demand, partially offset by improving production.
At 141.09 million barrels, distillate supplies were 7.5% less than the year-ago level but are in the upper boundary of the average range for this time of the year.
Refinery Rates
Refinery utilization was up 3.1% from the prior week to 86.3%, much more than forecast.
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