The U.S. Energy Department's weekly inventory release showed
that crude stockpiles jumped to their highest level since August
1990 amid a drop in refinery utilization. The agency's report
further revealed that refined product inventories - gasoline and
distillate - dropped from their previous week levels despite weaker
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
rose by 883,000 barrels for the week ending May 11, 2012, after
climbing by 2.13 million barrels the week before. In fact, oil
supplies have shot up by 36.24 million barrels since the week
ending March 16, 2012, the largest nine-week accumulation on
Analysts surveyed by Platts, the energy information arm of
McGraw-Hill Companies Inc.
), had expected oil stocks to go up some 750,000 barrels. A drop in
refinery utilization rates led to the stockpile build-up with the
world's biggest oil consumer even as imports fell.
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 - increased by 1.67 million
barrels from previous week's level to hit a new all-time high of
46.80 million barrels.
At 382.53 million barrels, current crude supplies are 3.1% 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
25.9 days in the previous week to 25.7 days. In the year-ago
period, the supply cover was 25.9 days.
Supplies of gasoline decreased for the fourteenth consecutive week
despite domestic consumption falling 3.8% to 8.63 million barrels a
day. The reduction in gasoline inventories could be attributed to
lower production and a drop in imports.
The 3.30 million barrels drop - much more than analyst
projections for a 200,000-barrel draw - took gasoline stockpiles
down to 201.01 million barrels, the lowest since November 2008. The
existing inventory level of the most widely used petroleum product
is 4.2% below the year-earlier levels and is in the lower limit of
the average range.
Distillate fuel supplies (including diesel and heating oil)
decreased by 309,000 barrels last week, contrary to analyst
expectations for a 350,000 barrel build. The fall in distillate
fuel stocks - the thirteenth decline in 15 weeks - could be
attributed to reduced refinery production.
At 119.49 million barrels, distillate supplies are 15.3% below
the year-ago level and are in the lower limit of the average range
for this time of the year.
Refinery utilization was down 0.2% from the prior week at
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