The U.S. Energy Department's inventory release showed that crude stockpiles recorded a drop for the first time in 11 weeks. The report further revealed that refined product inventories – gasoline and distillate – both increased from their previous week levels. Meanwhile, refiners scaled down their utilization rates.
Oil traders, however, chose to overlook the draw in crude stocks and focused on the big build numbers for distillate. As a result, West Texas Intermediate (WTI) crude futures fell 0.9% to settle at $37.16 per barrel Wednesday.
Analysis of the Data
Crude Oil: The federal government’s EIA report revealed that crude inventories fell by 3.57 million barrels for the week ending Dec 4, 2015, following a rise of 1.18 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 by 1.2 million barrels. A pullback in the level of production led to the larger-than-expected stockpile drawdown with the world's biggest oil consumer even as refinery usage slowed.
However, 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 423,000 barrels from the previous week’s level to 59.45 million barrels.
Despite the first weekly inventory decline in 11 weeks, at 485.86 million barrels, current crude supplies are up 28% 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 from 30.0 days in the previous week to 29.5 days. In the year-ago period, the supply cover was 23.5 days.
Gasoline: Supplies of gasoline were up for the fourth time in as many weeks, as production and imports rose. The 786,000 barrels rise – compared to analysts’ projections for a 3.2 million barrels increase in supply level – took gasoline stockpiles up to 217.65 million barrels. Following last week’s build, the existing stock of the most widely used petroleum product is marginally higher (by 0.4%) than the year-earlier level and sits comfortably above the upper limit of the average range.
Distillate: Distillate fuel supplies (including diesel and heating oil) were up 5 million barrels last week, double that of analysts’ expectations for a 2.5 million barrels rise in inventory level. The increase in distillate fuel stocks – just the fourth in 12 weeks – could be attributed to lower demand. At 149.41 million barrels, distillate supplies are 23% above the year-ago level and are in the upper half of the average range for this time of the year.
Refinery Rates: Refinery utilization was down 1.4% from the prior week to 93.1%.
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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