Another Jump in U.S. Crude Stocks

The U.S. Energy Department's weekly inventory release showed that crude stockpiles jumped to their highest level since July 1990, as imports climbed. The agency’s report further revealed that refined product inventories – gasoline and distillate – dropped from their previous week levels on stronger demand. Meanwhile, refinery utilization rate reflected an increase of 1.0%.

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 2.21 million barrels for the week ending May 25, 2012, after climbing by 883,000 barrels the week before. In fact, oil supplies have shot up by 38.45 million barrels since the week ending March 16, 2012, the largest ten-week accumulation in over a decade.

Analysts surveyed by Platts, the energy information arm of McGraw-Hill Companies Inc. (), had expected oil stocks to go up some 100,000 barrels. An uptick in the level of imports – especially from Venezuela and Angola – 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 54,000 barrels from previous week’s level to hit a new all-time high of 46.85 million barrels.

At 384.74 million barrels, current crude supplies are 2.9% 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 flat with the previous week’s level of 25.7 days. In the year-ago period also, the supply cover was 25.7 days.

Gasoline: Supplies of gasoline decreased for the fifteenth consecutive week as domestic consumption edged up 3.5% to 8.93 million barrels a day. This was partially offset by higher production and imports.

The 833,000 barrels drop – compared to analyst projections for an unchanged supply level – took gasoline stockpiles down to 200.18 million barrels, the lowest since November 2008. The existing inventory level of the most widely used petroleum product is 5.7% below the year-earlier levels and is below the lower limit of the average range.

Distillate: Distillate fuel supplies (including diesel and heating oil) decreased by 1.71 million barrels last week, contrary to analyst expectations for a 150,000 barrel build. The fall in distillate fuel stocks – the fourteenth decline in 16 weeks – could be attributed to stronger demand and a sharp drop in imports, partially offset by higher production.

At 117.78 million barrels, distillate supplies are 15.9% 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 1.0% from the prior week at 89.1%. Analysts were expecting the refinery run rate to increase 0.6%.