The U.S. Energy Department's weekly inventory release showed another significant stockpile increase – of more than 7 million barrels – as refiners scaled down their utilization rates to lowest since Jan. The report further revealed that refined product inventories – gasoline and distillate – both decreased from their previous week levels.
Analysis of the Data
Crude Oil: The federal government’s EIA report revealed that crude inventories climbed by 7.56 million barrels for the week ending Oct 9, 2015, following an increase of 3.07 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 1.8 million barrels. A drop in refinery usage and spike in imports led to the massive 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 1.13 million barrels from the previous week’s level to 54.20 million barrels.
Following the third successive weekly inventory rise, at 468.56 million barrels, current crude supplies are up 26.4% 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 up from 28.7 days in the previous week to 29.8 days. In the year-ago period, the supply cover was 23.6 days.
Gasoline: Supplies of gasoline were down for the first time in 6 weeks, as demand strength more than offset the rise in imports and production. The 2.62 million barrels fall – larger than analysts’ projections for a 1.5 million barrels decrease in supply level – took gasoline stockpiles down to 221.30 million barrels. Despite last week’s draw, the existing stock of the most widely used petroleum product is 7.6% higher than the year-earlier level and is above the upper limit of the average range.
Distillate: Distillate fuel supplies (including diesel and heating oil) were down 1.52 million barrels last week, significantly higher than analysts’ expectations for a 600,000 barrels fall in inventory level. The decrease in distillate fuel stocks – the fourth in a row – could be attributed to lower production. But at 147.63 million barrels, distillate supplies are still 18.5% 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 down 1.5% from the prior week to 86.0%. The falling refinery runs reflect slowing operations at the start of the fall maintenance season.
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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