U.S. Crude Supplies Drop Sharply - Analyst Blog


The U.S. Energy Department's weekly inventory release showed a steep drawdown in crude stockpiles. The report further revealed that within the 'refined products' category, gasoline stocks dropped, while distillate supplies were up from the week-ago levels. Meanwhile, refiners pulled back their utilization rates by 0.2%.

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 abroad.

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 ExxonMobil Corp. ( XOM ), Chevron Corp. ( CVX ), ConocoPhillips ( COP ), Valero Energy Corp. ( VLO ) and Tesoro Corp. ( TSO ).

Analysis of the Data

Crude Oil: The federal government's EIA report revealed that crude inventories fell by 3.70 million barrels for the week ending August 10, 2012, following a plunge of 3.73 million barrels the week before.

Analysts surveyed by Platts, the energy information arm of McGraw-Hill Companies Inc. ( MHP ), had expected oil stocks to go down some 1.5 million barrels. A drop in production and higher demand led to the third consecutive weekly stockpile drawdown with the world's biggest oil consumer even as imports rose modestly.

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 - increased by 899,000 barrels from previous week's level to 45.20 million barrels. Stocks are just under the all-time high of 47.78 million barrels reached earlier in June.

At 366.16 million barrels, current crude supplies are 3.4% 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 23.7 days in the previous week to 23.4 days. In the year-ago period, the supply cover was 22.9 days.

Gasoline: Supplies of gasoline decreased for the third time in as many weeks as domestic consumption jumped 5.3% to 9.31 million barrels a day. This was partially offset by higher production and imports.

The 2.37 million barrels drop - slightly above analyst projections - took gasoline stockpiles down to 203.70 million barrels. As a result of this decrease, existing inventory level of the most widely used petroleum product is now 3.0% off the year-earlier levels and is in the lower limit of the average range.

Distillate: Distillate fuel supplies (including diesel and heating oil) inched up by 677,000 barrels last week, compared to analyst expectations for an unchanged inventory level. The rise in distillate fuel stocks - the first in three weeks - could be attributed to weaker demand and higher imports. This was partially offset by lower production.

At 124.22 million barrels, distillate supplies are 19.4% below the year-ago level and are under the lower limit of the average range for this time of the year.

Refinery Rates: Refinery utilization was down 0.2% from the prior week at 92.6%. Analysts were expecting the refinery run rate to decrease 0.3%.

CONOCOPHILLIPS (COP): Free Stock Analysis Report
CHEVRON CORP (CVX): Free Stock Analysis Report
MCGRAW-HILL COS (MHP): Free Stock Analysis Report
TESORO CORP (TSO): Free Stock Analysis Report
VALERO ENERGY (VLO): Free Stock Analysis Report
EXXON MOBIL CRP (XOM): Free Stock Analysis Report
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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of The NASDAQ OMX Group, Inc.

This article appears in: Investing , Business , Stocks

Referenced Stocks: COP , CVX , EIA , MHP , TSO



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