Crude Inventories Surge, Commodity Loses 24% for the Quarter

The U.S. Energy Department's weekly inventory release showed a significant stockpile build of almost 4 million barrels as refiners scaled down their utilization rates. The 'bearish' report further revealed that gasoline supplies surged unexpectedly.

EIA data aside, oil traders also took cognizance of the threat of energy infrastructure damage from hurricane Joaquin and escalating worries about the Syrian war prompted by Russian air attacks.

All this made for volatile trading, which saw West Texas Intermediate (WTI) crude futures inch down 0.3% to settle at $45.09 per barrel Wednesday. For the month of September, U.S. oil lost 8.4%, while it slumped 24% during the third quarter.

Amid yesterday's choppiness, investors increased their exposure to oil and related support plays. As a result, market heavyweights like Occidental Petroleum Corp. OXY , Marathon Oil Corp. MRO , Transocean Ltd. RIG , Anadarko Petroleum Corp. APC , Halliburton Co. HAL , Chevron Corp. CVX and ConocoPhillips COP all experienced handsome gains in Wednesday's trading.

Analysis of the Data

Crude Oil: The federal government's EIA report revealed that crude inventories climbed by 3.96 million barrels for the week ending Sep 25, 2015, following a decline of 1.93 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 remain unchanged. A drop in refinery usage and spike in the level of imports led to the large stockpile build 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 - fell by 1.07 million barrels from the previous week's level to 52.97 million barrels.

Following the first inventory rise in 3 weeks, at 457.92 million barrels, current crude supplies are up 28% from the year-ago period and are near the highest level during this time of the year in 80 years at least.

The crude supply cover was up from 27.8 days in the previous week to 28.3 days. In the year-ago period, the supply cover was 22.1 days.

Gasoline: Supplies of gasoline were up for the fifth time in 6 weeks, as imports jumped and demand weakened amid strong production. The 3.25 million barrels surge - contrary to analysts' projections for a 500,000 barrels decrease in supply level - took gasoline stockpiles to 222.01 million barrels. After last week's build, the existing stock of the most widely used petroleum product is 6% higher than the year-earlier level and is close to the top half of the average range.

Distillate: Distillate fuel supplies (including diesel and heating oil) edged down 267,000 barrels last week, significantly lower than analysts' expectations for a 1.2 million barrels fall in inventory level. The decrease in distillate fuel stocks - second in as many weeks - could be attributed to falling imports and production. But at 151.61 million barrels, distillate supplies are still 21% above the year-ago level and are in the middle of the average range for this time of the year.

Refinery Rates: Refinery utilization was down 1.1% from the prior week to 89.8%. The falling refinery runs reflect slowing operations at the start of the fall maintenance season.

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.

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CHEVRON CORP (CVX): Free Stock Analysis Report

HALLIBURTON CO (HAL): Free Stock Analysis Report

CONOCOPHILLIPS (COP): Free Stock Analysis Report

OCCIDENTAL PET (OXY): Free Stock Analysis Report

TRANSOCEAN LTD (RIG): Free Stock Analysis Report

ANADARKO PETROL (APC): Free Stock Analysis Report

MARATHON OIL CP (MRO): 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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