Crude Supplies Jump to 9-Month High - Analyst Blog


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The U.S. Energy Department's weekly inventory release showed that crude stockpiles rose to their highest level since June 2011, as imports soared. The agency's report further revealed that within the 'refined products' category, gasoline stocks fell and distillate supplies were near flat. Meanwhile, refinery utilization rate reflected an increase of 1.2%.

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 soared 9.00 million barrels for the week ending March 30, 2012, after climbing by 7.10 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 1.9 million barrels. A sharp rise in the level of imports 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 - rose by 729,000 barrels from previous week's level to 40.29 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 362.40 million barrels, current crude supplies are 1.3% above the year-earlier level, and exceeds the upper limit of the average for this time of the year. The crude supply cover was up from 24.4 days in the previous week to 25.0 days. In the year-ago period, the supply cover was 25.0 days.

Gasoline: Supplies of gasoline decreased for the seventh consecutive week as domestic consumption edged up even as production and imports increased.

The 1.46 million barrels drop - slightly lower than projections - took gasoline stockpiles down to 221.91 million barrels. The existing inventory level of the most widely used petroleum product is 2.4% above the year-earlier levels and is in the upper limit of the average range.

Distillate: Distillate fuel inventories (including diesel and heating oil) increased marginally (by 19,000 barrels) last week, well below analyst expectations for a 600,000 barrel decrease. The near-flat distillate fuel supplies could be attributed to unchanged demand.

At 135.89 million barrels, distillate supplies are 11.5% below the year-ago level and are in the upper limit of the average range for this time of the year.

Refinery Rates: Refinery utilization was up 1.2% from the prior week at 85.7%.

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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