Crude, Distillate Stocks Tumble - Analyst Blog

The U.S. Energy Department's weekly inventory release showed an unexpected decrease in crude inventories, currently at their lowest level in almost two years, while gasoline supplies rose for the second straight week. The agency's report further revealed that distillate stockpiles declined for the eighth-straight week to a three-year low despite production rising to a record high. Meanwhile, refiners improved processing rates by 0.7%.

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

Crude Oil

The federal government's EIA report revealed that crude inventories shrank by 6.22 million barrels for the week ending November 18, 2011, the third straight weekly decline.

Analysts surveyed by Platts, the energy information arm of McGraw-Hill Companies Inc. ( MHP ), had expected oil stocks to remain unchanged. A rise in refinery utilization and lower imports led to the dip in stockpile 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 - came off 13,000 barrels from last week's level to 32.0 million barrels. Stocks reached an all-time high of 41.90 million barrels earlier this year.

At 330.82 million barrels, the lowest since January 29, 2010, current crude supplies are 7.8% lower than the year-earlier level, but are closer to the upper limit of the average for this time of the year. The crude supply cover was down from 23.1 days in the previous week to 22.6 days. In the year-ago period, the supply cover was 25.4 days.


Supplies of gasoline increased for the third time in four weeks on the back of improved production, higher import levels and weaker demand. The 4.48 million barrels-build - much more than projections - took gasoline stockpiles up to 209.63 million barrels. The existing inventory level is flat with year-earlier levels but is in the upper limit of the average range.


Distillate fuel inventories (including diesel and heating oil) were down by 770,000 barrels last week, compared with analyst expectations for a much larger fall. The decrease in distillate fuel supplies - for the eighth consecutive week - could be attributed to higher exports, partly offset by record production.

At 132.96 million barrels, the lowest since late 2008, distillate supplies are 16.0% below the year-ago level and are in the lower boundary of the average range at this time of the year.

Refinery Rates

Refinery utilization was up 0.7% from the prior week to 85.5%.

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 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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