The U.S. Energy Department's weekly inventory release showed
that crude stockpiles declined, as imports fell and refinery
demand strengthened. The report further revealed that within the
'refined products' category, gasoline stocks rose, while
distillate supplies were down from the week-ago levels.
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 964,000 barrels for the week ending December
14, 2012, following a climb of 843,000 barrels in the previous
The analysts surveyed by Platts - the energy information arm of
McGraw-Hill Companies Inc.
), had expected oil stocks to go down some 2.3 million barrels.
An uptick in refinery utilization rates and lower imports led to
the stockpile drawdown with the world's biggest oil consumer.
This was partially offset by the continued spike in domestic
production, now at their highest level since January 1994.
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 - edged up 145,000 barrels from the
previous week's level to 46.96 million barrels. Stocks are
currently just under the all-time high of 47.78 million barrels
reached in June.
At 371.65 million barrels, current crude supplies are 14.8% 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 24.5 days in the previous week to 24.1 days. In the
year-ago period, the supply cover was 21.9 days.
Supplies of gasoline were up for the fourth time in as many weeks
despite an improvement in domestic consumption. The increase in
gasoline inventories were led by the U.S. Gulf Coast.
The 2.2 million barrels jump - slightly ahead of the analysts'
projections for a 2 million barrels increase in supply level -
took gasoline stockpiles up to 219.32 million barrels. As a
result of this build, the existing inventory level of the most
widely used petroleum product is 0.4% higher than the
year-earlier level and is above the upper half of the average
Distillate fuel supplies (including diesel and heating oil)
dropped by 1.09 million barrels last week, contrary to the
analysts' expectations for a 1.5 million barrels increase in
inventory level. The surprise fall in distillate fuel stocks -
the first in 3 weeks - could be attributed to stronger demand,
partially offset by higher imports and production.
At 116.97 million barrels, distillate supplies are 15.9% below
the year-ago level and are well under the lower limit of the
average range for this time of the year.
Refinery utilization was up 1.1% from the prior week to 91.5%.
The analysts were expecting the refinery run rate to remain
CONOCOPHILLIPS (COP): Free Stock Analysis
CHEVRON CORP (CVX): Free Stock Analysis
MCGRAW-HILL COS (MHP): Free Stock Analysis
TESORO CORP (TSO): Free Stock Analysis Report
VALERO ENERGY (VLO): Free Stock Analysis
EXXON MOBIL CRP (XOM): Free Stock Analysis
To read this article on Zacks.com click here.