The U.S. Energy Department's weekly inventory release showed
that crude stockpiles jumped to their highest level since August
1990, as imports climbed. However, on the bullish side, the
agency's report revealed that refined product inventories -
gasoline and distillate - dropped sharply from their previous week
levels on stronger demand. Meanwhile, refinery utilization rate
reflected an increase of 0.4%.
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
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
Valero Energy Corp.
Analysis of the Data
The federal government's EIA report revealed that crude inventories
rose by 3.65 million barrels for the week ending May 4, 2012, after
climbing by 2.84 million barrels the week before. In fact, oil
supplies have shot up by more than 33 million barrels over the past
couple of month, as Saudi Arabia - the world's largest crude
exporter - continues to churn out volumes at or near record
Analysts surveyed by Platts, the energy information arm of
McGraw-Hill Companies Inc.
), had expected oil stocks to go up some 2.2 million barrels. An
uptick in the level of imports and production led to the stockpile
build-up with the world's biggest oil consumer even as refiners
improved their utilization rates.
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 1.16 million
barrels from previous week's level to hit a new all-time high of
44.13 million barrels.
At 379.52 million barrels, current crude supplies are 2.5% above
the year-earlier level, and are over the upper limit of the average
for this time of the year. The crude supply cover was up from 25.9
days in the previous week to 26.0 days. In the year-ago period, the
supply cover was 26.3 days.
Supplies of gasoline decreased for the twelfth consecutive week as
domestic consumption edged up and imports plunged. The 2.61 million
barrels drop - much more than analyst projections for a
600,000-barrel draw - took gasoline stockpiles down to 207.11
million barrels, the lowest since November last year. The existing
inventory level of the most widely used petroleum product is 0.6%
above the year-earlier levels and is in the middle of the average
Distillate fuel supplies (including diesel and heating oil)
decreased by 3.25 million barrels last week, compared to analyst
expectations for an unchanged inventory level. The fall in
distillate fuel stocks - the eleventh decline in 13 weeks - could
be attributed to stronger demand and a sharp drop in imports,
partially offset by higher production.
At 120.77 million barrels, distillate supplies are 16.3% below
the year-ago level and are in the lower limit of the average range
for this time of the year.
Refinery utilization was up 0.4% from the prior week at 86.4%.
CONOCOPHILLIPS (COP): Free Stock Analysis
CHEVRON CORP (CVX): Free Stock Analysis Report
MCGRAW-HILL COS (MHP): Free Stock Analysis
TESORO CORP (TSO): Free Stock Analysis Report
VALERO ENERGY (VLO): Free Stock Analysis Report
EXXON MOBIL CRP (XOM): Free Stock Analysis
To read this article on Zacks.com click here.