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The U.S. Energy Department's weekly inventory release showed that crude stockpiles jumped to their highest level since August 1990, as imports climbed. However, on the bullish side, the agency’s report revealed that refined product inventories – gasoline and distillate – dropped sharply from their previous week levels on stronger demand. Meanwhile, refinery utilization rate reflected an increase of 0.4%.
The Energy Information Administration ("EIA") Petroleum Status Report, which contains data for 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 businesses of companies engaged in the oil and refining industry, such as ExxonMobil Corp. (XOM - Analyst Report), Chevron Corp. (CVX - Analyst Report), ConocoPhillips (COP - Analyst Report), Valero Energy Corp. (VLO - Analyst Report) and Tesoro Corp. (TSO - Analyst Report).
Analysis of the Data
Crude Oil: The federal government’s EIA report revealed that crude inventories rose by 3.65 million barrels for the week ending May 4, 2012, after climbing by 2.84 million barrels the week before. In fact, oil supplies have shot up by more than 33 million barrels over the past couple of month, as Saudi Arabia – the world’s largest crude exporter – continues to churn out volumes at or near record levels.
Analysts surveyed by Platts, the energy information arm of McGraw-Hill Companies Inc. , had expected oil stocks to go up some 2.2 million barrels. An uptick in the level of imports and production led to the stockpile build-up with the world's biggest oil consumer even as refiners improved their utilization rates.
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 – increased by 1.16 million barrels from previous week’s level to hit a new all-time high of 44.13 million barrels.
At 379.52 million barrels, current crude supplies are 2.5% above the year-earlier level, and are over the upper limit of the average for this time of the year. The crude supply cover was up from 25.9 days in the previous week to 26.0 days. In the year-ago period, the supply cover was 26.3 days.
Gasoline: Supplies of gasoline decreased for the twelfth consecutive week as domestic consumption edged up and imports plunged. The 2.61 million barrels drop – much more than analyst projections for a 600,000-barrel draw – took gasoline stockpiles down to 207.11 million barrels, the lowest since November last year. The existing inventory level of the most widely used petroleum product is 0.6% above the year-earlier levels and is in the middle of the average range.
Distillate: Distillate fuel supplies (including diesel and heating oil) decreased by 3.25 million barrels last week, compared to analyst expectations for an unchanged inventory level. The fall in distillate fuel stocks – the eleventh decline in 13 weeks – could be attributed to stronger demand and a sharp drop in imports, partially offset by higher production.
At 120.77 million barrels, distillate supplies are 16.3% below the year-ago level and are in the lower limit of the average range for this time of the year.
Refinery Rates: Refinery utilization was up 0.4% from the prior week at 86.4%.