Another Week, Another Record for Crude Inventories - Analyst Blog

The U.S. Energy Department's weekly inventory release showed that crude stockpiles recorded another massive build, the tenth in a row, on untamed production growth. The report further revealed that within the 'refined products' category, gasoline stocks fell, while distillate supplies were up from the week-ago level.

Analysis of the Data

Crude Oil: The federal government's EIA report revealed that crude inventories jumped by 9.62 million barrels for the week ending Mar 13, 2015, following a climb of 4.51 million 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 3.7 million barrels. Sustained strength in domestic production - now at their all-time highest level - together with sharp uptick in the level of imports led to another huge stockpile build with the world's biggest oil consumer.

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 - were up 2.87 million barrels from the previous week's level to 54.40 million barrels, an all-time high.

Following the tenth successive weekly inventory surge, at 458.51 million barrels, current crude supplies are up 22% from the year-ago period and is at the highest level during this time of the year in 80 years at least. The crude supply cover was up from 29.4 days in the previous week to 30.0 days. In the year-ago period, the supply cover was 24.9 days.

Gasoline: Supplies of gasoline were down for the third time in 4 weeks, as demand strengthened. This was partly offset by higher domestic production and imports.

The 4.47 million barrels drop - considerably higher than analysts' projections for a 1.5 million barrels decrease in supply level - took gasoline stockpiles down to 235.40 million barrels. Notwithstanding the latest decline, the existing inventory level of the most widely used petroleum product is still 5.9% higher than the year-earlier level and is well over the upper limit of the average range.

Distillate: Distillate fuel supplies (including diesel and heating oil) were up 380,000 barrels last week, contrary to analysts' expectations for a 1.1 million barrels fall in inventory level. The increase in distillate fuel stocks - the second time in 6 weeks - could be attributed to higher production. At 125.88 million barrels, distillate supplies are 13.6% above the year-ago level but are in the lower half of the average range for this time of the year.

Refinery Rates: Refinery utilization was up 0.3% from the prior week to 88.1%.

About the Weekly Petroleum Status Report

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 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 the businesses of the companies engaged in the oil and refining industry.

The data from EIA generally acts as a catalyst for crude prices and affect producers, such as Exxon Mobil Corp. XOM , Chevron Corp. CVX and Devon Energy Corp. DVN , and refiners such as Valero Energy Corp. VLO , Phillips 66 PSX and HollyFrontier Corp. HFC .

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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 Nasdaq, Inc.

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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