The U.S. Energy Department's weekly inventory release showed
that crude stockpiles fell sharply, as imports tumbled even
though production climbed to its highest level in 19 years. The
report further revealed that refined product inventories -
gasoline and distillate - increased from their previous week
levels on weakening demand.
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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, such
Valero Energy Corp.
Analysis of the Data
The federal government's EIA report revealed that crude
inventories fell by 11.12 million barrels for the week ending
December 28, 2012, following a drop of 586,000 barrels in the
The 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
sharp drop in the level of imports led to the massive stockpile
drawdown with the world's biggest oil consumer even as domestic
production continued to spike, now at their highest level since
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 - climbed 573,000 barrels from the
previous week's level to hit a new all-time high of 49.75 million
At 359.94 million barrels, current crude supplies are 9.2% above
the year-earlier level, and comfortably exceed the upper limit of
the average for this time of the year. The crude supply cover was
down from 24.0 days in the previous week to 23.4 days. In the
year-ago period, the supply cover was 22.5 days.
Supplies of gasoline were up for the sixth time in as many weeks,
as domestic consumption fell. This was partially offset by lower
imports and production.
The 2.57 million barrels gain - slightly ahead of the analysts'
projections for a 2.3 million barrels increase in supply level -
took gasoline stockpiles up to 225.67 million barrels. As a
result of this build, the existing inventory level of the most
widely used petroleum product is 2.5% higher than the
year-earlier level and is well above the upper half of the
Distillate fuel supplies (including diesel and heating oil)
jumped 4.57 million barrels last week, significantly higher than
the analysts' expectations for a 1.6 million barrels build in
inventory level. The rise in distillate fuel stocks - the fourth
in 5 weeks - could be attributed to weaker demand, partially
offset by lower production and imports.
At 123.97 million barrels, distillate supplies are 13.6% below
the year-ago level and are under the lower limit of the average
range for this time of the year.
Refinery utilization nudged up 0.1% from the prior week to 90.4%.
The analysts were expecting the refinery run rate to go up by