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 report further revealed that refined product inventories -
gasoline and distillate - fell from their previous week 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.
Analysis of the Data
The federal government's EIA report revealed that crude
inventories rose by 3.83 million barrels for the week ending Mar
01, 2013, following a climb of 1.13 million barrels in the
The analysts surveyed by Platts - the energy information arm of
McGraw-Hill Companies Inc.
), had expected oil stocks to go up some 1.1 million barrels. A
sharp drop in refinery utilization rates led to the seventh
straight weekly stockpile build-up with the world's biggest oil
consumer even as imports declined.
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 257,000 barrels from
the previous week's level to 50.84 million barrels. Stocks are
currently just under the all-time high of 51.86 million barrels
reached in January.
At 381.35 million barrels, current crude supplies are 10.3% 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 from 26.3 days in the previous week to 26.7 days. In the
year-ago period, the supply cover was 23.5 days.
Supplies of gasoline were down for the fourth time in as many
weeks despite a decline in domestic consumption and higher
imports. The fall in gasoline inventories could be attributed to
The 616,000 barrels withdrawal - much below analysts' projections
for a 1.6 million barrels decrease in supply level - took
gasoline stockpiles down to 227.88 million barrels. Following
this drawdown, the existing inventory level of the most widely
used petroleum product is 0.7% lower than the year-earlier level
despite being in the upper half of the average range.
Distillate fuel supplies (including diesel and heating oil) were
down 3.83 million barrels last week, significantly higher than
the analysts' expectations for a 1.3 million barrels drop in
inventory level. The decrease in distillate fuel stocks - the
fifth in 6 weeks - could be attributed to stronger demand, as
well as lower production and imports.
At 120.35 million barrels, distillate supplies are 13.7% below
the year-ago level and are close to the lower limit of the
average range for this time of the year.
Refinery utilization decreased 2.9% from the prior week to 82.2%.
The analysts were expecting the refinery run rate to remain
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).
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