The U.S. Energy Department's weekly inventory release showed
that crude stockpiles fell for the first time in 11 weeks - from
their 22-year high levels - as imports declined and refinery
activity rose by an impressive 1.9%. The agency's report further
revealed that refined product inventories - gasoline and distillate
- increased from their previous week levels on weaker demand.
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
fell by 111,000 barrels for the week ending June 1, 2012, after
climbing by 2.21 million barrels the week before. In fact, oil
supplies decreased for the first time in 11 weeks after shooting up
by 38.45 million barrels during the period March 16- May 25, 2012,
the largest 10-week accumulation in over a decade.
Analysts surveyed by Platts, the energy information arm of
McGraw-Hill Companies Inc.
), had expected oil stocks to go down some 1 million barrels. A
decline in the level of imports and sharply higher refinery
activity led to the stockpile drawdown with the world's biggest oil
However, 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 926,000 barrels from previous
week's level to hit a new all-time high of 47.78 million
At 384.63 million barrels, current crude supplies are 4.2% 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 down from
25.7 days in the previous week to 25.4 days. In the year-ago
period, the supply cover was 25.0 days.
Supplies of gasoline snapped a 15-week declining streak as domestic
consumption edged down 3.2% to 8.65 million barrels a day and
imports rose. This was partially offset by lower production.
The 3.35 million barrels gain - compared to analyst projections
for a 500,000 hike in supply level - took gasoline stockpiles up to
203.53 million barrels, after stumbling to the lowest level since
November 2008 in the previous week. The existing inventory level of
the most widely used petroleum product is still 5.1% below the
year-earlier levels and is in the lower limit of the average
Distillate fuel supplies (including diesel and heating oil)
increased by 2.25 million barrels last week, much larger than
analyst expectations for a 600,000 barrel build. The rise in
distillate fuel stocks - just the third increase in 17 weeks -
could be attributed to weaker demand and higher imports.
At 120.04 million barrels, distillate supplies are 14.8% 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 1.9% from the prior week at 91.0%.
Analysts were expecting the refinery run rate to increase 0.6%.
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