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EIA Reports Surprise Build in Domestic Oil Supplies
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The U.S. Energy Department's weekly inventory release showed that crude stockpiles recorded an unexpected build to reach another all-time high. On a further bearish note, the report revealed that refined product inventories – gasoline and distillate – both dropped by smaller-than-expected amounts. Also, supplies at the Cushing, OK storage hub jumped, while domestic output reached its highest level in fourteen months.
Worryingly, the rising U.S. oil production starting to undermine the OPEC members’ surprisingly high level of compliance with the landmark production cut agreement signed late last year.
However, the string of bearish EIA data was offset by news of the unplanned production outage of the giant 180,000 barrels-per-day Buzzard field in the North Sea.
As a result, West Texas Intermediate (WTI) crude futures edged up 0.2% (or 12 cents) to $51.15 per barrel Wednesday.
Analysis of the EIA Data
Crude Oil: The federal government’s EIA report revealed that crude inventories increased by 1.57 million barrels for the week ending Mar 31, 2017, following a rise of 867,000 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 200,000 barrels. An uptick in domestic production – now at their highest level since Jan 2016 – led to the surprise stockpile build with the world's biggest oil consumer even as refinery activity rose and imports declined.
The latest inventory increase adds to the supply of excess oil in the U.S., which remains awash with the commodity. At 535.54 million barrels, current crude supplies are up more than 7% from the year-ago period and are at the highest level since the EIA began keeping records in 1982.
Worryingly, stocks at the Cushing terminal in Oklahoma – the key delivery hub for U.S. crude futures traded on the New York Mercantile Exchange – was up 1.41 million barrels from previous week’s level to a record 69.14 million barrels.
The crude supply cover was down from 33.9 days in the previous week to 33.5 days. In the year-ago period, the supply cover was 32.9 days.
Gasoline: Supplies of gasoline fell for the seventh straight week on lower production. The 618,000 million barrels draw – way below polled number of 1.9 million barrels decrease in supply level – took gasoline stockpiles down to 239.10 million barrels. Following last week’s decline, the existing stock of the most widely used petroleum product is now 2% lower than the year-earlier level but is in the upper half of the average range.
Distillate: Distillate fuel supplies (including diesel and heating oil) went down by 536,000 barrels last week, again significantly less than analysts’ expectations for a 1.58 million-barrels fall. Following the eighth successive reduction in distillate fuel stocks, at 152.37 million barrels, distillate supplies are 6.5% lower than the year-ago level but are within the upper half of the average range for this time of the year.
Refinery Rates: Refinery utilization was up by 1.5% from the prior week to 90.8%.
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 ExxonMobil Corp. (XOM - Free Report) , Chevron Corp. (CVX - Free Report) and ConocoPhillips (COP - Free Report) , and refiners such as Tesoro Corp. , Phillips 66 (PSX - Free Report) and HollyFrontier Corp. . Each of these firms has a Zacks Rank #3 (Hold).
While the above ideas are being shared with the public, other trades are hidden from everyone but selected members. Would you like to peek behind the curtain and view them? Starting today, for the next month, you can follow all Zacks' private buys and sells in real time from value to momentum . . . from stocks under $10 to ETF and option moves . . . from insider trades to companies that are about to report positive earnings surprises (we've called them with 80%+ accuracy). You can even look inside portfolios so exclusive that they are normally closed to new investors. Click here for Zacks' secret trades >>
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EIA Reports Surprise Build in Domestic Oil Supplies
The U.S. Energy Department's weekly inventory release showed that crude stockpiles recorded an unexpected build to reach another all-time high. On a further bearish note, the report revealed that refined product inventories – gasoline and distillate – both dropped by smaller-than-expected amounts. Also, supplies at the Cushing, OK storage hub jumped, while domestic output reached its highest level in fourteen months.
Worryingly, the rising U.S. oil production starting to undermine the OPEC members’ surprisingly high level of compliance with the landmark production cut agreement signed late last year.
However, the string of bearish EIA data was offset by news of the unplanned production outage of the giant 180,000 barrels-per-day Buzzard field in the North Sea.
As a result, West Texas Intermediate (WTI) crude futures edged up 0.2% (or 12 cents) to $51.15 per barrel Wednesday.
Analysis of the EIA Data
Crude Oil: The federal government’s EIA report revealed that crude inventories increased by 1.57 million barrels for the week ending Mar 31, 2017, following a rise of 867,000 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 200,000 barrels. An uptick in domestic production – now at their highest level since Jan 2016 – led to the surprise stockpile build with the world's biggest oil consumer even as refinery activity rose and imports declined.
The latest inventory increase adds to the supply of excess oil in the U.S., which remains awash with the commodity. At 535.54 million barrels, current crude supplies are up more than 7% from the year-ago period and are at the highest level since the EIA began keeping records in 1982.
Worryingly, stocks at the Cushing terminal in Oklahoma – the key delivery hub for U.S. crude futures traded on the New York Mercantile Exchange – was up 1.41 million barrels from previous week’s level to a record 69.14 million barrels.
The crude supply cover was down from 33.9 days in the previous week to 33.5 days. In the year-ago period, the supply cover was 32.9 days.
Gasoline: Supplies of gasoline fell for the seventh straight week on lower production. The 618,000 million barrels draw – way below polled number of 1.9 million barrels decrease in supply level – took gasoline stockpiles down to 239.10 million barrels. Following last week’s decline, the existing stock of the most widely used petroleum product is now 2% lower than the year-earlier level but is in the upper half of the average range.
Distillate: Distillate fuel supplies (including diesel and heating oil) went down by 536,000 barrels last week, again significantly less than analysts’ expectations for a 1.58 million-barrels fall. Following the eighth successive reduction in distillate fuel stocks, at 152.37 million barrels, distillate supplies are 6.5% lower than the year-ago level but are within the upper half of the average range for this time of the year.
Refinery Rates: Refinery utilization was up by 1.5% from the prior week to 90.8%.
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 ExxonMobil Corp. (XOM - Free Report) , Chevron Corp. (CVX - Free Report) and ConocoPhillips (COP - Free Report) , and refiners such as Tesoro Corp. , Phillips 66 (PSX - Free Report) and HollyFrontier Corp. . Each of these firms has a Zacks Rank #3 (Hold).
In case you are looking for energy names for your portfolio, one could opt for Pioneer Natural Resources Co. (PXD - Free Report) . It has a Zacks Rank #1 (Strong Buy). Shares of Pioneer Natural Resources surged nearly 34% over the past year, significantly outpacing the 14.5% gain for the Zacks categorized Oil and Gas - Exploration and Production – U.S. industry. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Now See Our Private Investment Ideas
While the above ideas are being shared with the public, other trades are hidden from everyone but selected members. Would you like to peek behind the curtain and view them? Starting today, for the next month, you can follow all Zacks' private buys and sells in real time from value to momentum . . . from stocks under $10 to ETF and option moves . . . from insider trades to companies that are about to report positive earnings surprises (we've called them with 80%+ accuracy). You can even look inside portfolios so exclusive that they are normally closed to new investors. Click here for Zacks' secret trades >>