Crude Supplies Surge, Fuels Drop - 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 September 2011, as supplies at the Cushing Storage Hub soared. However, the agency's report also revealed that both gasoline and distillate stocks declined over the week on demand recovery. Meanwhile, refinery utilization rate reflected a decrease 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 climbed by 1.75 million barrels for the week ending March 9, 2012, after rising by a modest 832,000 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 2.1 million barrels. Surging inventories at Cushing and lower refinery utilization rates led to the stockpile buildup 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 - jumped by 2.52 million barrels from previous week's level to 38.70 million barrels, the most since the week ending June 3, 2011. Stocks reached an all-time high of 41.90 million barrels in April last year.

At 347.50 million barrels, current crude supplies are 0.9% below the year-earlier level, but are in the upper limit of the average for this time of the year. The crude supply cover was up from 23.5 days in the previous week to 23.7 days. In the year-ago period, the supply cover was 25.3 days.

Gasoline: Supplies of gasoline decreased for the fourth consecutive week as domestic consumption rose 1.9% to 8.42 million barrels a day and imports dropped. These factors were partially offset by higher production.

The 1.41 million barrels dip - same as projections - took gasoline stockpiles down to 228.12 million barrels. The existing inventory level of the most widely used petroleum product is 1.4% above the year-earlier levels and is in the upper limit of the average range.

Distillate: Distillate fuel inventories (including diesel and heating oil) plunged by 4.68 million barrels last week, well above analyst expectations for a 1.5 million barrels decrease. The fall in distillate fuel supplies - for the fifth consecutive week - could be attributed to stronger demand and lower output.

At 134.81 million barrels, distillate supplies are 11.7% 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 1.2% from the prior week at 82.7%. Analysts were expecting the refinery run rate to decline 0.2% to 83.7%.


 
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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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of The NASDAQ OMX Group, Inc.



This article appears in: Investing , Business , Stocks

Referenced Stocks: COP , CVX , MHP , TSO , VLO

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