The U.S. Energy Department's weekly inventory release showed that crude stockpiles went up, as imports jumped. The report further revealed that within the ‘refined products’ category, gasoline stocks rose, while distillate supplies were down from the week-ago level. Meanwhile, refiners scaled up their utilization rates by 1.8%.
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.
Analysis of the Data
Crude Oil: The federal government’s EIA report revealed that crude inventories edged up by 313,000 barrels for the week ending Jun 14, 2013, following a jump of 2.52 million barrels in the previous week.
The analysts surveyed by Platts – the energy information arm of McGraw-Hill Financial Inc. (MHFI - Analyst Report) – had expected crude stocks to go down some 1 million barrels. A sharp uptick in the level of imports led to the surprise stockpile build-up with the world's biggest oil consumer even as refiners improved their utilization rates and production pulled back.
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 – were down 669,000 barrels from the previous week’s level to 48.60 million barrels, the lowest year-to-date. Stocks are currently 6.3% under the all-time high of 51.86 million barrels reached in Jan.
Following the weekly inventory increase, at 394.12 million barrels, current crude supplies are 1.8% above the year-earlier level, and exceeds the upper limit of the average for this time of the year. The crude supply cover was down marginally from 25.8 days in the previous week to 25.7 days. In the year-ago period, the supply cover was 25.0days.
Gasoline: Supplies of gasoline were up for the second time in as many weeks despite a rise in domestic consumption as well as lower imports and production. The spike in gasoline inventories was mainly concentrated in the West Coast and in the Midwest.
The 183,000 barrels gain – significantly below the analysts’ projections for a 1.2 million-barrels increase in supply level – took gasoline stockpiles up to 221.73 million barrels. Following this build, the existing inventory level of the most widely used petroleum product is 9.4% higher than the year-earlier level and is above the top half of the average range.
Distillate: Distillate fuel supplies (including diesel and heating oil) were down 489,000 barrels last week, contrary to analysts’ expectations for a 300,000 barrels build in inventory level. The decrease in distillate fuel stocks – the second in successive weeks – could be attributed to slightly lower production, partially offset by weaker demand and increase in imports.
At 121.62 million barrels, distillate supplies are 0.4% above the year-ago level but is in the lower limit of the average range for this time of the year.
Refinery Rates: Refinery utilization was up 1.8% from the prior week to 89.3%. The analysts were expecting the refinery run rate to increase 1.0% to 88.5%.
A bullish data from the EIA generally acts as a positive catalyst for crude prices and buoy producers, such as Exxon Mobil Corp. (XOM - Analyst Report), Chevron Corp. (CVX - Analyst Report) and ConocoPhillips (COP - Analyst Report). With an improvement in the companies’ ability to generate positive earnings surprises, they can then move higher from their current Zacks Rank #3 (Hold).