Crude Supplies Rise Unexpectedly

The U.S. Energy Department's weekly inventory release showed that crude stockpiles jumped unexpectedly, as imports climbed. The report further revealed that within the ‘refined products’ category, gasoline stocks dropped, while distillate supplies were up from the week-ago levels. Meanwhile, refiners were forced to pull back their utilization rates by 1.4% on the back of lingering hurricane-related disruptions.

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 1.99 million barrels for the week ending September 7, 2012, following a slide of 7.43 million barrels in the previous week.

The analysts surveyed by Platts – the energy information arm of McGraw-Hill Companies Inc. ( ) , had expected oil stocks to go down some 3.25 million barrels. A sharp rise in the level of imports and drop in refinery utilization rates led to the surprise stockpile build-up with the world's biggest oil consumer.

However, crude inventories at the Cushing terminal in Oklahoma – the key delivery hub for U.S. crude futures traded on the New York Mercantile Exchange – edged down by 828,000 barrels from the previous week’s level to 44.09 million barrels. Stocks are currently just under the all-time high of 47.78 million barrels reached in June.

At 359.09 million barrels, current crude supplies are 3.7% above the year-earlier level, and exceeds the upper limit of the average for this time of the year. The crude supply cover was up from 23.4 days in the previous week to 24.0 days. In the year-ago period, the supply cover was 22.5 days.

Gasoline: Supplies of gasoline decreased for the seventh time in as many weeks despite domestic consumption declining 5.3% to 8.70 million barrels a day. The fall in gasoline inventories could be attributed to lower production and imports.

The 1.18 million barrels drop – below the analyst projections – took gasoline stockpiles down to 197.72 million barrels. As a result of this decrease, the existing inventory level of the most widely used petroleum product is now 6.2% off the year-earlier levels and is in the lower limit of the average range.

Distillate: Distillate fuel supplies (including diesel and heating oil) gained 1.48 million barrels last week, contrary to analyst expectations for a 1.5 million barrels decline in inventory level. The rise in distillate fuel stocks – the fifth in as many weeks – could be attributed to higher imports and output, partially offset by stronger demand.

At 128.55 million barrels, distillate supplies are 18.9% below the year-ago level and are under the lower limit of the average range for this time of the year.

Refinery Rates: Refinery utilization tumbled 1.4% from the prior week to 84.7%, as the facilities struggled to source crude following the aftereffects of Hurricane Isaac.