The U.S. Energy Department's weekly inventory release showed
that crude stockpiles logged an unexpected decrease from their
all-time high level, as refiner demand strengthened and
production fell. The report further revealed that product
inventories - gasoline and distillate - increased from their
previous week levels on the back of weak consumption.
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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 624,000 barrels for the week ending May 10,
2013, following a climb of 230,000 barrels in the previous week.
The analysts surveyed by Platts - the energy information arm of
McGraw-Hill Financial Inc.
) - had expected crude stocks to go up some 300,000 barrels. An
uptick in refinery utilization rates, together with lower level
of production led to the surprise stockpile drawdown with the
world's biggest oil consumer.
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 - were up 575,000 barrels from the
previous week's level to 49.72 million barrels. Stocks are
currently just under the all-time high of 51.86 million barrels
reached in January.
Despite the weekly inventory decrease, at 394.89 million barrels,
current crude supplies are 3.5% above the year-earlier level, and
exceeds the upper limit of the average for this time of the year.
The crude supply cover was down from 26.6 days in the previous
week to 26.5 days. In the year-ago period, the supply cover was
Supplies of gasoline were up for the first time in 5 weeks, as
domestic consumption weakened and production jumped. This was
partially offset by lower imports.
The 2.59 million barrels gain - contrary to analysts' projections
for a 800,000 barrels decrease in supply level - took gasoline
stockpiles up to 217.66 million barrels. Following this build,
the existing inventory level of the most widely used petroleum
product is 6.6% higher than the year-earlier level and is in the
top half of the average range.
Distillate fuel supplies (including diesel and heating oil) were
up 2.30 million barrels last week, above analysts' expectations
for an 800,000 barrels gain in inventory level. The increase in
distillate fuel stocks - the fifth in as many weeks - could be
attributed to weaker demand and higher production, partially
offset by plunging imports.
At 119.86 million barrels, distillate supplies are essentially
flat with the year-ago level but are in the lower limit of the
average range for this time of the year.
Refinery utilization was up 1.0% from the prior week to 88.0%.
The analysts were expecting the refinery run rate to increase
0.4% to 87.4%.
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).