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Oil Markets Gain After EIA Reports Significant Crude Draw
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The U.S. Energy Department's inventory release showed that crude stockpiles recorded a higher-than-expected weekly draw to reach the lowest level since 2015.
But the positive effect from the hefty crude inventory draw was partly offset by another build in gasoline supplies. On a further bearish note, domestic oil production maintained its steadily rising trend that continues to be the biggest headwind for the market.
As a result, the front month West Texas Intermediate (WTI) crude futures gained 0.9% (or 53 cents) to end at $58.09 per barrel yesterday.
Energy Stocks Jump
The federal data sparked widespread buying in energy stocks, which pushed the Energy Select Sector SPDR – an assortment of the largest U.S. energy companies – up more than 1.4% Wednesday.
The two energy representatives in the 30-stock Dow Jones industrial average, ExxonMobil (XOM - Free Report) and Chevron (CVX - Free Report) added 0.5% and 0.9%, respectively. Meanwhile, some of the biggest gainers of the S&P 500 were oil and oil-related stocks like Chesapeake Energy Corp. (CHK - Free Report) , Concho Resources Inc. , Pioneer Natural Resources Company (PXD - Free Report) and Halliburton (HAL - Free Report) .
Analysis of the EIA Data
Crude Oil: The federal government’s EIA report revealed that crude inventories fell by 6.5 million barrels for the week ending Dec 15, following a decrease of 5.1 million barrels in the previous week. The analysts surveyed by The Wall Street Journal had expected crude stocks to go down some 3.2 million barrels.
An uptick in refinery demand led to the larger-than-expected stockpile draw with the world's biggest oil consumer even as U.S. output edged up 9,000 barrels per day last week to 9.8 million barrels per day – the most since the EIA started maintaining weekly data in 1983.
Oil stockpiles have shrunk in 29 of the last 37 weeks and are down nearly 97 million barrels since April. The gradual fall has helped the U.S. crude market shift from year-over-year storage surplus to a deficit. At 436.5 million barrels, current crude supplies are 10.1% below the year-ago period and the lowest since 2015 though they are in the middle of the average range during this time of the year.
Meanwhile, 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 by 754,000 barrels to 53 million barrels.
The crude supply cover was down from 26.1 days in the previous week to 25.6 days. In the year-ago period, the supply cover was 29.5 days.
Gasoline: Supplies of gasoline were up for the sixth straight week on strong production. The 1.2 million barrels addition – more than the polled number of 1.1 million barrels rise in supply level – took gasoline stockpiles up to 227.8 million barrels. Despite last week’s increase, the existing stock of the most widely used petroleum product remains 0.4% below the year-earlier level but is close to the upper limit of the average range.
Distillate: Distillate fuel supplies (including diesel and heating oil) was up 769,000 barrels last week, greater than analysts’ expectations. The weekly rise could be attributed to lower demand. At 128.8 million barrels, current supplies are 16.1% below the year-ago level and are in the lower half of the average range for this time of the year.
Refinery Rates: Refinery utilization was up by 0.7% from the prior week to 94.1%.
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.
Based in Dallas, TX, HollyFrontier is one of the largest independent refiners and marketers of petroleum products in the U.S. Over 30 days, the Dallas, TX-based company has seen the Zacks Consensus Estimate for 2017 and 2018 increase 14% and 14.1%, to $2.36 and $2.91 per share, respectively.
Zacks’ Best Private Investment Ideas
While we are happy to share many articles like this on the website, our best recommendations and most in-depth research are not available to the public.
Starting today, for the next month, you can follow all Zacks' private buys and sells in real time. Our experts cover all kinds of trades… from value to momentum . . . from stocks under $10 to ETF and option moves . . . from stocks that corporate insiders are buying up to companies that are about to report positive earnings surprises. You can even look inside exclusive portfolios that are normally closed to new investors.
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Oil Markets Gain After EIA Reports Significant Crude Draw
The U.S. Energy Department's inventory release showed that crude stockpiles recorded a higher-than-expected weekly draw to reach the lowest level since 2015.
But the positive effect from the hefty crude inventory draw was partly offset by another build in gasoline supplies. On a further bearish note, domestic oil production maintained its steadily rising trend that continues to be the biggest headwind for the market.
As a result, the front month West Texas Intermediate (WTI) crude futures gained 0.9% (or 53 cents) to end at $58.09 per barrel yesterday.
Energy Stocks Jump
The federal data sparked widespread buying in energy stocks, which pushed the Energy Select Sector SPDR – an assortment of the largest U.S. energy companies – up more than 1.4% Wednesday.
The two energy representatives in the 30-stock Dow Jones industrial average, ExxonMobil (XOM - Free Report) and Chevron (CVX - Free Report) added 0.5% and 0.9%, respectively. Meanwhile, some of the biggest gainers of the S&P 500 were oil and oil-related stocks like Chesapeake Energy Corp. (CHK - Free Report) , Concho Resources Inc. , Pioneer Natural Resources Company (PXD - Free Report) and Halliburton (HAL - Free Report) .
Analysis of the EIA Data
Crude Oil: The federal government’s EIA report revealed that crude inventories fell by 6.5 million barrels for the week ending Dec 15, following a decrease of 5.1 million barrels in the previous week. The analysts surveyed by The Wall Street Journal had expected crude stocks to go down some 3.2 million barrels.
An uptick in refinery demand led to the larger-than-expected stockpile draw with the world's biggest oil consumer even as U.S. output edged up 9,000 barrels per day last week to 9.8 million barrels per day – the most since the EIA started maintaining weekly data in 1983.
Oil stockpiles have shrunk in 29 of the last 37 weeks and are down nearly 97 million barrels since April. The gradual fall has helped the U.S. crude market shift from year-over-year storage surplus to a deficit. At 436.5 million barrels, current crude supplies are 10.1% below the year-ago period and the lowest since 2015 though they are in the middle of the average range during this time of the year.
Meanwhile, 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 by 754,000 barrels to 53 million barrels.
The crude supply cover was down from 26.1 days in the previous week to 25.6 days. In the year-ago period, the supply cover was 29.5 days.
Gasoline: Supplies of gasoline were up for the sixth straight week on strong production. The 1.2 million barrels addition – more than the polled number of 1.1 million barrels rise in supply level – took gasoline stockpiles up to 227.8 million barrels. Despite last week’s increase, the existing stock of the most widely used petroleum product remains 0.4% below the year-earlier level but is close to the upper limit of the average range.
Distillate: Distillate fuel supplies (including diesel and heating oil) was up 769,000 barrels last week, greater than analysts’ expectations. The weekly rise could be attributed to lower demand. At 128.8 million barrels, current supplies are 16.1% below the year-ago level and are in the lower half of the average range for this time of the year.
Refinery Rates: Refinery utilization was up by 0.7% from the prior week to 94.1%.
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.
Want to Own an Energy Stock Now?
If you are looking for a near-term energy play, HollyFrontier Corp. may be a good selection. This company has a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Based in Dallas, TX, HollyFrontier is one of the largest independent refiners and marketers of petroleum products in the U.S. Over 30 days, the Dallas, TX-based company has seen the Zacks Consensus Estimate for 2017 and 2018 increase 14% and 14.1%, to $2.36 and $2.91 per share, respectively.
Zacks’ Best Private Investment Ideas
While we are happy to share many articles like this on the website, our best recommendations and most in-depth research are not available to the public.
Starting today, for the next month, you can follow all Zacks' private buys and sells in real time. Our experts cover all kinds of trades… from value to momentum . . . from stocks under $10 to ETF and option moves . . . from stocks that corporate insiders are buying up to companies that are about to report positive earnings surprises. You can even look inside exclusive portfolios that are normally closed to new investors.
Click here for Zacks' private trades >>