Gasoline Supplies at 10-Month High - Analyst Blog


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The U.S. Energy Department's weekly inventory release showed an unexpected decrease in crude inventories on the back of lower imports, though product demand continues to be weak. Gasoline supplies rose for the third straight week to reach their highest level since early March 2011. The agency's report further revealed that distillate stocks posted another build. Meanwhile, refinery utilization rate was down by 1.9%.

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 fell by 3.44 million barrels for the week ending January 13, 2012, after jumping by 4.96 million barrels last week.

Analysts surveyed by Platts, the energy information arm of McGraw-Hill Companies Inc. ( MHP ) , had expected oil stocks to go up some 2.6 million barrels. A sharp decline in imports led to the stockpile drawdown with the world's biggest oil consumer.

Importantly, crude inventories at the Cushing terminal in Oklahoma - the key delivery hub for U.S. crude futures - came off 832,000 barrels from last week's level to 28.27 million barrels, the lowest level since November 6, 2009. Stocks reached an all-time high of 41.90 million barrels in April last year.

At 331.21 million barrels, current crude supplies are 1.3% 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 down from 22.7 days in the previous week to 22.5 days. In the year-ago period, the supply cover was 22.8 days.

Gasoline: Supplies of gasoline increased for the third consecutive week as demand dropped and imports rose. In fact, domestic gasoline consumption slid 2.2% to 8 million barrels a day last week, the lowest since September 2001.   

The 3.72 million barrels-build - more than that of projections - took gasoline stockpiles up to 227.52 million barrels. The existing inventory level of the most widely used petroleum product is comparable to the year-earlier levels and is in the upper limit of the average range.

Distillate: Distillate fuel inventories (including diesel and heating oil) were up by 438,000 barrels last week, below analyst expectations for a 1.4 million barrels increase. The growth in distillate fuel supplies - for the fourth consecutive week - could be attributed to rising imports, whose effect was partly nullified by slightly higher demand and a dip in production.

At 148.00 million barrels, distillate supplies are 10.7% 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 1.9% from the prior week at 83.7%, the lowest since the week of November 4. Analysts were expecting the refinery run rate to decline 0.2% to 85.4%.

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 Nasdaq, Inc.

This article appears in: Investing , Business , Stocks
Referenced Stocks: COP , CVX , MHP , TSO , VLO

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