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The U.S. Energy Department's inventory release showed that crude stockpiles recorded a shock weekly build despite strong refinery utilization. On a further bearish note, distillate inventories jumped, while domestic oil production continues to be robust.
As a result, the front month West Texas Intermediate (WTI) crude futures moved down 3% (or $2.03) to end at $65.01 per barrel yesterday – the lowest settlement since Jun 6.
Investors Dump Energy Stocks
The federal data sparked widespread selling in energy stocks, which pushed the Energy Select Sector SPDR – an assortment of the largest U.S. energy companies – down more than 3.5% Wednesday.
The two energy representatives in the 30-stock Dow Jones industrial average, ExxonMobil (XOM - Free Report) and Chevron (CVX - Free Report) lost 1.8% and 3.8%, respectively, yesterday. Meanwhile, some of the biggest casualties of the S&P 500 were oil and oil-related stocks like Diamond Offshore Drilling, Inc. (DO - Free Report) , Marathon Oil Corporation (MRO - Free Report) , Anadarko Petroleum Corporation and EOG Resources, Inc. (EOG - Free Report) .
Analysis of the EIA Data
Crude Oil: The federal government’s EIA report revealed that crude inventories jumped by 6.8 million barrels for the week ending Aug 10, following a decrease of 1.4 million barrels in the previous week. The analysts surveyed by The Wall Street Journal had expected crude stocks to go down some 2.4 million barrels.
Strong domestic production and sharp rise in imports led to the surprise stockpile build with the world's biggest oil consumer even as refiner demand rose to a record high. In particular, output in the United States have climbed sharply on increased production from shale formations to remain over the 10 million barrels a day threshold since early February.
Moreover, stocks at the Cushing terminal in Oklahoma – the key delivery hub for U.S. crude futures traded on the New York Mercantile Exchange – rose 1.6 million barrels to 23.4 million barrels.
Despite last week’s shock increase, oil inventories have generally trended lower in a year and a half. In fact, stockpiles have shrunk in 47 of the last 71 weeks and are down more than 50 million barrels in the past year. The gradual fall has helped the U.S. crude market shift from year-over-year storage surplus to a deficit. At 414.2 million barrels, current crude supplies are 11% below the year-ago figure though stocks have risen 1% above the five-year average.
The crude supply cover was up from 23.4 days in the previous week to 23.6 days. In the year-ago period, the supply cover was 26.7 days.
Gasoline: Gasoline supplies were down for the sixth time in seven weeks on stronger demand. The 740,000 barrels draw – above the polled number of 500,000 barrels fall in supply level – took gasoline stockpiles down to 233.1 million barrels. Despite last week’s decline, the stock of the most widely used petroleum product still remain 0.9% above the year-earlier level and is 5% over the five-year range.
Distillate: Distillate fuel supplies (including diesel and heating oil) soared 3.6 million barrels last week. Meanwhile, analysts expected the supply level to increase by 700,000 barrels. The third weekly rise in a row could be attributed to lower demand. Nevertheless, at 129 million barrels, current supplies are 13% below the year-ago level and 8% lower than the five-year average.
Refinery Rates: Refinery utilization was up by 1.5% from the prior week to 98.1% - the highest in 20 years.
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.
McDermott International is a fully vertically integrated company providing engineering and construction solutions to the energy firms. In the last 30 days, two earnings estimates moved north, while none moved south for the current year. The Zacks Consensus Estimate for earnings has risen 4% in the same period.
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Here's another stock idea to consider. Much like petroleum 150 years ago, lithium power may soon shake the world, creating millionaires and reshaping geo-politics. Soon electric vehicles (EVs) may be cheaper than gas guzzlers. Some are already reaching 265 miles on a single charge.
With battery prices plummeting and charging stations set to multiply, one company stands out as the #1 stock to buy according to Zacks research.
Image: Bigstock
EIA Reports Shock Inventory Increase Despite Strong Refining
The U.S. Energy Department's inventory release showed that crude stockpiles recorded a shock weekly build despite strong refinery utilization. On a further bearish note, distillate inventories jumped, while domestic oil production continues to be robust.
As a result, the front month West Texas Intermediate (WTI) crude futures moved down 3% (or $2.03) to end at $65.01 per barrel yesterday – the lowest settlement since Jun 6.
Investors Dump Energy Stocks
The federal data sparked widespread selling in energy stocks, which pushed the Energy Select Sector SPDR – an assortment of the largest U.S. energy companies – down more than 3.5% Wednesday.
The two energy representatives in the 30-stock Dow Jones industrial average, ExxonMobil (XOM - Free Report) and Chevron (CVX - Free Report) lost 1.8% and 3.8%, respectively, yesterday. Meanwhile, some of the biggest casualties of the S&P 500 were oil and oil-related stocks like Diamond Offshore Drilling, Inc. (DO - Free Report) , Marathon Oil Corporation (MRO - Free Report) , Anadarko Petroleum Corporation and EOG Resources, Inc. (EOG - Free Report) .
Analysis of the EIA Data
Crude Oil: The federal government’s EIA report revealed that crude inventories jumped by 6.8 million barrels for the week ending Aug 10, following a decrease of 1.4 million barrels in the previous week. The analysts surveyed by The Wall Street Journal had expected crude stocks to go down some 2.4 million barrels.
Strong domestic production and sharp rise in imports led to the surprise stockpile build with the world's biggest oil consumer even as refiner demand rose to a record high. In particular, output in the United States have climbed sharply on increased production from shale formations to remain over the 10 million barrels a day threshold since early February.
Moreover, stocks at the Cushing terminal in Oklahoma – the key delivery hub for U.S. crude futures traded on the New York Mercantile Exchange – rose 1.6 million barrels to 23.4 million barrels.
Despite last week’s shock increase, oil inventories have generally trended lower in a year and a half. In fact, stockpiles have shrunk in 47 of the last 71 weeks and are down more than 50 million barrels in the past year. The gradual fall has helped the U.S. crude market shift from year-over-year storage surplus to a deficit. At 414.2 million barrels, current crude supplies are 11% below the year-ago figure though stocks have risen 1% above the five-year average.
The crude supply cover was up from 23.4 days in the previous week to 23.6 days. In the year-ago period, the supply cover was 26.7 days.
Gasoline: Gasoline supplies were down for the sixth time in seven weeks on stronger demand. The 740,000 barrels draw – above the polled number of 500,000 barrels fall in supply level – took gasoline stockpiles down to 233.1 million barrels. Despite last week’s decline, the stock of the most widely used petroleum product still remain 0.9% above the year-earlier level and is 5% over the five-year range.
Distillate: Distillate fuel supplies (including diesel and heating oil) soared 3.6 million barrels last week. Meanwhile, analysts expected the supply level to increase by 700,000 barrels. The third weekly rise in a row could be attributed to lower demand. Nevertheless, at 129 million barrels, current supplies are 13% below the year-ago level and 8% lower than the five-year average.
Refinery Rates: Refinery utilization was up by 1.5% from the prior week to 98.1% - the highest in 20 years.
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, McDermott International, Inc. may be an excellent 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.
McDermott International is a fully vertically integrated company providing engineering and construction solutions to the energy firms. In the last 30 days, two earnings estimates moved north, while none moved south for the current year. The Zacks Consensus Estimate for earnings has risen 4% in the same period.
Will You Make a Fortune on the Shift to Electric Cars?
Here's another stock idea to consider. Much like petroleum 150 years ago, lithium power may soon shake the world, creating millionaires and reshaping geo-politics. Soon electric vehicles (EVs) may be cheaper than gas guzzlers. Some are already reaching 265 miles on a single charge.
With battery prices plummeting and charging stations set to multiply, one company stands out as the #1 stock to buy according to Zacks research.
It's not the one you think.
See This Ticker Free >>