The U.S. Energy Department's weekly inventory release showed that crude stockpiles recorded a massive build – the largest increase in at least 14 years – on lower refinery runs and continued strength in production. The report further revealed that within the ‘refined products’ category, gasoline stocks rose, while distillate supplies were down from the week-ago level.
Analysis of the Data
Crude Oil: The federal government’s EIA report revealed that crude inventories jumped by 10.07 million barrels for the week ending Jan 16, 2015, following a climb of 5.39 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 up some 2.5 million barrels. A drop in refinery utilization rates, together with strong domestic production led to the huge 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 2.91 million barrels from the previous week’s level to 36.78 million barrels. Nevertheless, stocks are currently 29% under the all-time high of 51.86 million barrels reached in Jan 2013.
Following the second successive weekly inventory surge, at 397.85 million barrels, current crude supplies are up 13.3% 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 23.9 days in the previous week to 25.0 days. In the year-ago period, the supply cover was 22.2 days.
Gasoline: Supplies of gasoline were up for the eleventh successive week, as production jumped and domestic consumption weakened. This was partially offset by lower imports.
The 588,000 barrels gain – compared to analysts’ projections for a 1.05 million barrels increase in supply level – took gasoline stockpiles up to 240.92 million barrels. After the latest build, the existing inventory level of the most widely used petroleum product is 2.4% 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 down 3.27 million barrels last week, counter to analysts’ expectations for a 167,000 barrels rise in inventory level. The decrease in distillate fuel stocks – the first time in 5 weeks – could be attributed to lower production and strong demand, partially offset by higher imports. At 136.58 million barrels, distillate supplies are 13.2% 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 5.5% from the prior week to 85.5%.
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 Devon Energy Corp. (DVN), and refiners, such as Valero Energy Corp. (VLO), Phillips 66 (PSX) and HollyFrontier Corp. (HFC).
Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report
Be the first to comment