The U.S. Energy Department's weekly inventory release showed that lower imports and refining strength meant that crude stockpiles fell for the fourth straight week despite domestic production notching up a new record. The report further revealed that within the ‘refined products’ category, gasoline stocks fell, while distillate supplies were up from the week-ago level.
Analysis of the Data
Crude Oil: The federal government’s EIA report revealed that crude inventories fell by 2.80 million barrels for the week ending May 22, 2015, following a decrease of 2.67 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 1.8 million barrels. A pullback in imports and strength in refinery utilization rates led to the larger-than-expected stockpile drawdown with the world's biggest oil consumer even as domestic production spiked to its all-time highest level of 9.566 million barrels per day.
Importantly, crude inventories at the Cushing terminal in Oklahoma – the key delivery hub for U.S. crude futures traded on the New York Mercantile Exchange – edged down 433,000 barrels from the previous week’s level to 60.01 million barrels.
Notwithstanding the fourth successive weekly inventory decline, at 479.36 million barrels, current crude supplies are up 22% from the year-ago period and are still at the highest level during this time of the year in 80 years at least. The crude supply cover was down from 29.8 days in the previous week to 29.5 days. In the year-ago period, the supply cover was 24.8 days.
Gasoline: Supplies of gasoline were down for the third consecutive week, as demand strengthened to near record levels. The 3.31 million barrels drop – compared to analysts’ projections for a 1.5 million barrels decrease in supply level – took gasoline stockpiles down to 220.63 million barrels. Even after the latest decline, the existing inventory level of the most widely used petroleum product is still 4.3% higher than the year-earlier level and is close to the upper limit of the average range.
Distillate: Distillate fuel supplies (including diesel and heating oil) were up 1.12 million barrels last week, counter to analysts’ expectations for a 720,000 barrels fall in inventory level. The increase in distillate fuel stocks – first time in 3 weeks – could be attributed to slightly higher imports and production, together with weak demand. At 128.84 million barrels, distillate supplies are 10.9% above the year-ago level but are in the bottom half of the average range for this time of the year.
Refinery Rates: Refinery utilization was up 1.2% from the prior week to 93.6%.
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.
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 >>
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