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Oil at 11-Month High as EIA Reports Big Inventory Draw
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The U.S. Energy Department's weekly inventory release showed that crude stockpiles recorded a big drop. What’s more, supplies at the Cushing, OK storage hub also fell. On a bearish note though, the report revealed that refined product inventories – gasoline and distillate – both increased from their previous week levels as demand softened.
However, the third consecutive fall in domestic oil supplies pushed West Texas Intermediate (WTI) crude futures higher by 1.7% (or 87 cents) to settle at $51.23 per barrel Wednesday – the highest level since July 2015. The commodity also found support from continued supply outages in Nigeria.
Analysis of the EIA Data
Crude Oil: The federal government’s EIA report revealed that crude inventories decreased by 3.23 million barrels for the week ending May 27, 2016, following a decline of 1.37 million barrels in the previous week.
The analysts surveyed by S&P Global Platts – the leading independent commodities and energy data provider – had expected crude stocks to go down some 3.4 million barrels. Improved refinery usage and lower imports led to the stockpile drawdown with the world's biggest oil consumer even as production picked up.
In particular, 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 1.36 million barrels from previous week’s level to 65.56 million barrels.
Despite the fourth inventory decline in 5 weeks, at 532.48 million barrels, current crude supplies are up 13% from the year-ago period and are at the highest level during this time of the year.
The crude supply cover was down from 32.9 days in the previous week to 32.6 days. In the year-ago period, the supply cover was 28.7 days.
Gasoline: Supplies of gasoline were up for the second time in 3 weeks as demand weakened and production rose. The 1.01 million barrels rise – contrary to analysts’ polled number of 900,000 barrels decrease in supply level – took gasoline stockpiles up to 239.63 million barrels. Following last week’s build, the existing stock of the most widely used petroleum product is 10% higher than the year-earlier level and is comfortably above the upper half of the average range.
Distillate: Distillate fuel supplies (including diesel and heating oil) jumped 1.75 million barrels last week, as opposed to analysts’ expectations for a 600,000 barrels drop in inventory level. The increase in distillate fuel stocks – ending a run of seven consecutive draws – could be attributed to lower demand amid rising production and imports. At 151.38 million barrels, distillate supplies are 13% higher than the year-ago level and are well above the upper half of the average range for this time of the year.
Refinery Rates: Refinery utilization was up by 1.1% from the prior week to 90.9%.
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.
The data from EIA generally acts as a catalyst for crude prices and affect producers, such as Exxon Mobil Corp. (XOM - Free Report) , Chevron Corp. (CVX - Free Report) and ConocoPhillips (COP - Free Report) , and refiners such as Valero Energy Corp. (VLO - Free Report) , Phillips 66 (PSX - Free Report) and HollyFrontier Corp. .
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Oil at 11-Month High as EIA Reports Big Inventory Draw
The U.S. Energy Department's weekly inventory release showed that crude stockpiles recorded a big drop. What’s more, supplies at the Cushing, OK storage hub also fell. On a bearish note though, the report revealed that refined product inventories – gasoline and distillate – both increased from their previous week levels as demand softened.
However, the third consecutive fall in domestic oil supplies pushed West Texas Intermediate (WTI) crude futures higher by 1.7% (or 87 cents) to settle at $51.23 per barrel Wednesday – the highest level since July 2015. The commodity also found support from continued supply outages in Nigeria.
Analysis of the EIA Data
Crude Oil: The federal government’s EIA report revealed that crude inventories decreased by 3.23 million barrels for the week ending May 27, 2016, following a decline of 1.37 million barrels in the previous week.
The analysts surveyed by S&P Global Platts – the leading independent commodities and energy data provider – had expected crude stocks to go down some 3.4 million barrels. Improved refinery usage and lower imports led to the stockpile drawdown with the world's biggest oil consumer even as production picked up.
In particular, 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 1.36 million barrels from previous week’s level to 65.56 million barrels.
Despite the fourth inventory decline in 5 weeks, at 532.48 million barrels, current crude supplies are up 13% from the year-ago period and are at the highest level during this time of the year.
The crude supply cover was down from 32.9 days in the previous week to 32.6 days. In the year-ago period, the supply cover was 28.7 days.
Gasoline: Supplies of gasoline were up for the second time in 3 weeks as demand weakened and production rose. The 1.01 million barrels rise – contrary to analysts’ polled number of 900,000 barrels decrease in supply level – took gasoline stockpiles up to 239.63 million barrels. Following last week’s build, the existing stock of the most widely used petroleum product is 10% higher than the year-earlier level and is comfortably above the upper half of the average range.
Distillate: Distillate fuel supplies (including diesel and heating oil) jumped 1.75 million barrels last week, as opposed to analysts’ expectations for a 600,000 barrels drop in inventory level. The increase in distillate fuel stocks – ending a run of seven consecutive draws – could be attributed to lower demand amid rising production and imports. At 151.38 million barrels, distillate supplies are 13% higher than the year-ago level and are well above the upper half of the average range for this time of the year.
Refinery Rates: Refinery utilization was up by 1.1% from the prior week to 90.9%.
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.
The data from EIA generally acts as a catalyst for crude prices and affect producers, such as Exxon Mobil Corp. (XOM - Free Report) , Chevron Corp. (CVX - Free Report) and ConocoPhillips (COP - Free Report) , and refiners such as Valero Energy Corp. (VLO - Free Report) , Phillips 66 (PSX - Free Report) and HollyFrontier Corp. .
Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report >>