The U.S. Energy Department's weekly inventory release showed
that crude stockpiles jumped to hit their highest level since
June last year, as imports climbed. However, the report further
revealed that refined product inventories - gasoline and
distillate - declined from their previous week levels on
strengthening demand. Meanwhile, refiners scaled up their
utilization rates by 2.2%.
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The U.S. Energy Department's weekly inventory release showed that
crude stockpiles logged another increase to hit their highest
level since June last year, as refiner demand weakened.
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 rose by 3.26 million barrels for the week ending Mar
22, 2013, following a decline of 1.31 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 1.6 million barrels.
An uptick in the level of imports led to the stockpile build-up
with the world's biggest oil consumer even as refinery
utilization rates improved.
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 up 439,000 barrels from
the previous week's level to 49.47 million barrels. Stocks are
currently just under the all-time high of 51.86 million barrels
reached in January.
Following the weekly inventory increase, at 385.92 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 up marginally
from 26.8 days in the previous week to 26.9 days. In the year-ago
period, the supply cover was 24.4 days.
Supplies of gasoline were down for the seventh time in as many
weeks, as domestic consumption strengthened. This was partially
offset by higher production and imports.
The 1.60 million-barrel withdrawal - in line with analysts'
projections - took gasoline stockpiles down to 221.24 million
barrels. Following this drawdown, the existing inventory level of
the most widely used petroleum product is 1.0% lower than the
year-earlier level despite being in the middle of the average
Distillate fuel supplies (including diesel and heating oil) were
down 4.51 million barrels last week, significantly above
analysts' expectations for a 700,000 barrels drop in inventory
level. The decrease in distillate fuel stocks - the third in 4
weeks - could be attributed to stronger demand, as well as lower
production, partially offset by higher imports.
At 115.25 million barrels, distillate supplies are 15.2% below
the year-ago level and are close to the lower limit of the
average range for this time of the year.
Refinery utilization was up 2.2% from the prior week to 85.7%.
The analysts were expecting the refinery run rate to increase
0.6% to 84.1%.
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).