Crude Stocks Rise Unexpectedly - Analyst Blog

The U.S. Energy Department's weekly inventory release showed an unexpected increase in crude inventories on the back of higher imports, while gasoline supplies fell for the second straight week. The agency's report further revealed that distillate stocks posted a surprise build, as demand dropped. Meanwhile, refiners reduced 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) .

Analysis of the Data

Crude Oil: The federal government's EIA report revealed that crude inventories rose by 3.90 million barrels for the week ending December 23, 2011, after tumbling by a whopping 10.57 million barrels last week.

Analysts surveyed by Platts, the energy information arm of McGraw-Hill Companies Inc. (MHP) , had expected oil stocks to go down some 2.3 million barrels. A fall in refinery utilization and higher imports led to the stockpile build-up 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 - came off 289,000 barrels from last week's level to 29.9 million barrels. Stocks reached an all-time high of 41.90 million barrels earlier this year.

At 327.48 million barrels, current crude supplies are 3.5% lower than the year-earlier level, but are in the upper limit of the average for this time of the year. The crude supply cover was up from 21.9 days in the previous week to 22.2 days. In the year-ago period, the supply cover was 22.7 days.

Gasoline: Supplies of gasoline decreased for the second consecutive week as demand edged higher. The 692,000 barrels-drawdown - more than projections - took gasoline stockpiles down to 217.71 million barrels. The existing inventory level is 1.3% above the year-earlier levels and is over the upper limit of the average range.

Distillate: Distillate fuel inventories (including diesel and heating oil) were up by 1.21 million barrels last week, contrary to analyst expectations for a decline. The increase in distillate fuel supplies could be attributed to a drop in demand.

At 140.35 million barrels, distillate supplies are 12.8% below the year-ago level and are in the lower boundary of the average range for this time of the year.

Refinery Rates: Refinery utilization was down 0.7% from the prior week at 84.2%. Analysts were expecting the refinery run rate to edge down 0.1% to 84.8%.

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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