The U.S. Energy Department's weekly inventory release showed that crude stockpiles recorded a surprise build on higher imports and production. The report further revealed that refined product inventories – gasoline and distillate – both increased from their previous week levels.
Analysis of the Data
Crude Oil: The federal government’s EIA report revealed that crude inventories climbed by 5.39 million barrels for the week ending Jan 9, 2015, following a decrease of 3.06 million 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 some 400,000 barrels. A sharp uptick in the level of imports, drop in refinery utilization rates, together with higher domestic production – now at their all-time highest level – led to the unexpected stockpile build with the world's biggest oil consumer.
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 1.78 million barrels from the previous week’s level to 33.87 million barrels. Nevertheless, stocks are currently 35% under the all-time high of 51.86 million barrels reached in Jan 2013.
Following the first inventory increase in 3 weeks, at 387.78 million barrels, current crude supplies are up 10.7% from the year-ago period and is at the highest level during this time of the year in 80 years at least. The crude supply cover was up from 23.4 days in the previous week to 23.9 days. In the year-ago period, the supply cover was 21.8 days.
Gasoline: Supplies of gasoline were up for the tenth successive week, as production jumped. This was partially offset by lower imports and strength in domestic consumption.
The 3.17 million barrels gain – compared to analysts’ projections for a 2.7 million barrels increase in supply level – took gasoline stockpiles up to 240.33 million barrels. After the latest build, the existing inventory level of the most widely used petroleum product is 3.1% higher than the year-earlier level and is well over the upper limit of the average range.
Distillate: Distillate fuel supplies (including diesel and heating oil) were up 2.93 million barrels last week, topping analysts’ expectations for a 1.9 million barrels rise in inventory level. The increase in distillate fuel stocks – the fourth time in as many weeks – could be attributed to a pile up in the low and ultra-low sulfur diesel category. At 139.85 million barrels, distillate supplies are 12.8% above the year-ago level but are in the lower half of the average range for this time of the year.
Refinery Rates: Refinery utilization was down 2.9% from the prior week to 91%.
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 Devon Energy Corp. (DVN), and refiners, such as Valero Energy Corp. (VLO), Phillips 66 (PSX) and HollyFrontier Corp. (HFC).
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