The U.S. Energy Department's weekly inventory release showed
that crude stockpiles fell sharply from their all-time high
level, as refiner demand strengthened and imports plunged. The
report further revealed that within the 'refined products'
category, gasoline stocks fell, while distillate supplies were up
from the week-ago level.
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
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.
Analysis of the Data
The federal government's EIA report revealed that crude
inventories fell by 6.27 million barrels for the week ending May
31, 2013, following a climb of 3.0 million barrels in the
previous week that saw it reach the highest level since EIA
started gathering data in 1978.
The analysts surveyed by Platts - the energy information arm of
McGraw-Hill Financial Inc.
) - had expected crude stocks to go down some 1 million barrels.
A sharp drop in the level of imports and uptick in refinery
utilization rates led to the massive stockpile drawdown 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 down 484,000 barrels from
the previous week's level to 50.02 million barrels. Stocks are
currently just under the all-time high of 51.86 million barrels
reached in Jan.
Despite the weekly inventory decrease, at 397.29 million barrels,
current crude supplies are 1.8% above the year-earlier level, and
exceeds the upper limit of the average for this time of the year.
The crude supply cover was down from 26.2 days in the previous
week to 25.7 days. In the year-ago period, the supply cover was
Supplies of gasoline were down for the second time in as many
weeks despite a decline in domestic consumption and rise in
production. The fall in gasoline inventories could be attributed
to lower imports.
The 366,000 barrels withdrawal - contrary to analysts'
projections for a 1 million-barrels increase in supply level -
took gasoline stockpiles down to 218.80 million barrels.
Notwithstanding this drawdown, the existing inventory level of
the most widely used petroleum product is 7.5% higher than the
year-earlier level and is close to the top half of the average
Distillate fuel supplies (including diesel and heating oil) were
up 2.61 million barrels last week, compared to analysts'
expectations for a 1.4 million barrels build in inventory level.
The increase in distillate fuel stocks - the seventh in 8 weeks -
could be attributed to weaker demand, higher imports and improved
At 123.27 million barrels, distillate supplies are 2.8% above the
year-ago level but are in the lower limit of the average range
for this time of the year.
Refinery utilization was up 2.0% from the prior week to 88.4%.
The analysts were expecting the refinery run rate to increase
0.5% to 86.9%.
A bullish data from the EIA generally acts as a positive catalyst
for crude prices and buoy producers, such as
Exxon Mobil Corp.
). With an improvement in the companies' ability to generate
positive earnings surprises, they can then move higher from their
current Zacks Rank #3 (Hold).
CONOCOPHILLIPS (COP): Free Stock Analysis
CHEVRON CORP (CVX): Free Stock Analysis
MCGRAW HILL FIN (MHFI): Free Stock Analysis
EXXON MOBIL CRP (XOM): Free Stock Analysis
To read this article on Zacks.com click here.