The U.S. Energy Department's weekly inventory release showed
that crude stockpiles logged an unexpected decrease to halt an
eight-week rising trend, as refiner demand strengthened and
imports fell. The report further revealed that refined product
inventories - gasoline and distillate - also declined from their
previous week levels.
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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.
Analysis of the Data
The federal government's EIA report revealed that crude
inventories fell by 1.31 million barrels for the week ending Mar
08, 2013, following a climb of 2.62 million barrels in the
The analysts surveyed by Platts - the energy information arm of
McGraw-Hill Companies Inc.
), had expected crude stocks to go up some 2 million barrels. An
uptick in refinery utilization rates, together with lower level
of imports led to the surprise stockpile drawdown 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 - was down 286,000 barrels from
the previous week's level to 49.03 million barrels. Stocks are
currently just under the all-time high of 51.86 million barrels
reached in January.
Notwithstanding the weekly inventory decline, at 382.66 million
barrels, current crude supplies are 10.5% 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 27.1
days in the previous week to 26.8 days. In the year-ago period,
the supply cover was 23.9 days.
Supplies of gasoline were down for the sixth time in as many
weeks despite a decline in domestic consumption. The fall in
gasoline inventories could be attributed to plunging imports and
The 1.48 million-barrel withdrawal - below analysts' projections
for a 2.5 million-barrel decrease in supply level - took gasoline
stockpiles down to 222.83 million barrels. Following this
drawdown, the existing inventory level of the most widely used
petroleum product is 1.8% lower than the year-earlier level
despite being in the middle of the average range.
Distillate fuel supplies (including diesel and heating oil) were
down 672,000 barrels last week, failing to match analysts'
expectations for a 1.5 million barrels drop in inventory level.
The decrease in distillate fuel stocks - the second in 3 weeks -
could be attributed to stronger demand, as well as lower imports,
partially offset by higher production.
At 119.77 million barrels, distillate supplies are 12.3% below
the year-ago level and are in the lower limit of the average
range for this time of the year.
Refinery utilization was up 2.5% from the prior week to 83.5%.
The analysts were expecting the refinery run rate to increase
0.5% to 81.5%.
A bullish data from the EIA generally acts as a positive catalyst
for crude prices and buoy producers, such as
Exxon Mobil Corp.
). With an improvement in the companies' ability to generate
positive earnings surprises, they can then move higher from their
current Zacks Rank #3 (Hold).