The U.S. Energy Department's weekly inventory release showed that crude stockpiles jumped to their highest level since June 2011 amid a 1.9% drop in refinery utilization. However, on the bullish side, the agency’s report revealed that refined product inventories – gasoline and distillate – dropped sharply from their previous week levels.
The Energy Information Administration ("EIA") Petroleum Status Report, which contains data for 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 businesses of companies engaged in the oil and refining industry, such as ExxonMobil Corp. (XOM), Chevron Corp. (CVX), ConocoPhillips (COP), Valero Energy Corp. (VLO) and Tesoro Corp. (TSO).
Analysis of the Data
Crude Oil: The federal government’s EIA report revealed that crude inventories rose by 2.79 million barrels for the week ending April 06, 2012, after climbing by 9.00 million barrels the week before.
Analysts surveyed by Platts, the energy information arm of McGraw-Hill Companies Inc. (MHP), had expected oil stocks to go up some 1.8 million barrels. A 1.9% drop in refinery utilization rates led to the stockpile build-up with the world's biggest oil consumer even as imports (particularly from Canada) fell.
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 – increased by 292,000 barrels from previous week’s level to 40.59 million barrels, the most since the week ending May 6, 2011. Stocks reached an all-time high of 41.90 million barrels in April last year.
At 365.19 million barrels, current crude supplies are 1.6% above the year-earlier level, and are in the upper limit of the average for this time of the year. The crude supply cover was up from 25.0 days in the previous week to 25.2 days. In the year-ago period, the supply cover was 25.2 days.
Gasoline: Supplies of gasoline decreased for the eighth consecutive week despite domestic consumption falling 1.2% to 8.68 million barrels a day. In particular, stockpiles on the East Coast – currently confronted with the prospect of three refinery shutdowns this summer – declined 1.92 million barrels. The reduction in gasoline inventories could be attributed to lower production and a drop in imports.
The 4.28 million barrels drop – almost 3.5 times that of projections – took gasoline stockpiles down to 217.64 million barrels. The existing inventory level of the most widely used petroleum product is 3.8% above the year-earlier levels and is in the upper limit of the average range.
Distillate: Distillate fuel inventories (including diesel and heating oil) decreased by 4 million barrels last week, contrary to analyst expectations for a 200,000 barrel build. The fall in distillate fuel supplies – the seventh decline in 9 weeks – could be attributed to stronger demand and sharply lower imports.
At 131.89 million barrels, distillate supplies are 12.5% below 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 1.9% from the prior week at 83.8%. Analysts were expecting the refinery run rate to increase 0.3% to 86.0%.
CONOCOPHILLIPS (COP): Free Stock Analysis Report
CHEVRON CORP (CVX): Free Stock Analysis Report
MCGRAW-HILL COS (MHP): Free Stock Analysis Report
TESORO CORP (TSO): Free Stock Analysis Report
VALERO ENERGY (VLO): Free Stock Analysis Report
EXXON MOBIL CRP (XOM): Free Stock Analysis Report
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