The U.S. Energy Department's weekly inventory release showed that crude stockpiles fell for the eighth straight week despite a rise in production. The report further revealed that refined product inventories – gasoline and distillate – both increased from their previous week levels.
Following the data from the U.S. government, West Texas Intermediate (WTI) crude futures settled down 1.2%, at $60.27 per barrel Wednesday. The southward movement was mainly due to the increase in oil production, while the climb in gasoline stocks – that were expected to fall – also spooked investors.
Analysis of the Data
Crude Oil: The federal government’s EIA report revealed that crude inventories tumbled by 4.93 million barrels for the week ending June 19, 2015, following a decrease of 2.68 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 2.3 million barrels. A sharp pullback in imports and strength in refinery utilization rates led to the steep stockpile drawdown with the world's biggest oil consumer even as domestic production spiked to 9.604 million barrels per day, just shy of its all-time highest level.
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 – fell 1.87 million barrels from the previous week’s level to 56.25 million barrels.
Notwithstanding the eighth successive weekly inventory decline, at 462.99 million barrels, current crude supplies are up 19.3% 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 slightly, from 28.5 days in the previous week to 28.1 days. In the year-ago period, the supply cover was 24.8 days.
Gasoline: Supplies of gasoline were up for the second consecutive week, as imports and production jumped. The 680,000 barrels rise – contrary to analysts’ projections for a 583,000 barrels decrease in supply level – took gasoline stockpiles up to 218.49 million barrels. Following the latest increase, the existing inventory level of the most widely used petroleum product is 1.6% higher than the year-earlier level and is in the upper limit of the average range.
Distillate: Distillate fuel supplies (including diesel and heating oil) were up 1.84 million barrels last week, much higher than analysts’ expectations for a 592,000 barrels rise in inventory level. The increase in distillate fuel stocks – fifth in as many weeks – could be attributed to to a pile up in the low and ultra-low sulfur diesel category. At 135.43 million barrels, distillate supplies are 12.3% above the year-ago level and are in the middle of the average range for this time of the year.
Refinery Rates: Refinery utilization was up 0.9% from the prior week to 94.0%.
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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