U.S. Crude Stockpiles Decline - Analyst Blog

The U.S. Energy Department's weekly inventory release showed that crude stockpiles declined, as imports fell and refinery demand strengthened. The report further revealed that within the 'refined products' category, gasoline stocks rose, while distillate supplies were down from the week-ago levels.

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, such as ExxonMobil Corp. ( XOM ), Chevron Corp. ( CVX ), ConocoPhillips ( COP ), Valero Energy Corp. ( VLO ) and Tesoro Corp. ( TSO ).

Analysis of the Data

Crude Oil: The federal government's EIA report revealed that crude inventories fell by 964,000 barrels for the week ending December 14, 2012, following a climb of 843,000 barrels in the previous week.

The 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. An uptick in refinery utilization rates and lower imports led to the stockpile drawdown with the world's biggest oil consumer. This was partially offset by the continued spike in domestic production, now at their highest level since January 1994.

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 - edged up 145,000 barrels from the previous week's level to 46.96 million barrels. Stocks are currently just under the all-time high of 47.78 million barrels reached in June.

At 371.65 million barrels, current crude supplies are 14.8% above the year-earlier level, and comfortably exceed the upper limit of the average for this time of the year. The crude supply cover was down from 24.5 days in the previous week to 24.1 days. In the year-ago period, the supply cover was 21.9 days.

Gasoline: Supplies of gasoline were up for the fourth time in as many weeks despite an improvement in domestic consumption. The increase in gasoline inventories were led by the U.S. Gulf Coast.

The 2.2 million barrels jump - slightly ahead of the analysts' projections for a 2 million barrels increase in supply level - took gasoline stockpiles up to 219.32 million barrels. As a result of this build, the existing inventory level of the most widely used petroleum product is 0.4% higher than the year-earlier level and is above the upper half of the average range.

Distillate: Distillate fuel supplies (including diesel and heating oil) dropped by 1.09 million barrels last week, contrary to the analysts' expectations for a 1.5 million barrels increase in inventory level. The surprise fall in distillate fuel stocks - the first in 3 weeks - could be attributed to stronger demand, partially offset by higher imports and production.

At 116.97 million barrels, distillate supplies are 15.9% below the year-ago level and are well under the lower limit of the average range for this time of the year.

Refinery Rates: Refinery utilization was up 1.1% from the prior week to 91.5%. The analysts were expecting the refinery run rate to remain unchanged.

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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