Big Jump in U.S. Gasoline Supplies

The U.S. Energy Department's weekly inventory release showed that crude stockpiles increased, as production climbed. The report further revealed that refined product inventories – gasoline and distillate – increased from their previous week levels. In particular, gasoline supplies in the Gulf Coast region jumped considerably. Meanwhile, refiners were forced to pull back their utilization rates by 2.3% on the back of hurricane-related disruptions.

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 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 1.77 million barrels for the week ending November 2, 2012, following a slide of 2.05 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 up some 1 million barrels. Continued spike in domestic production – now at their highest level since December 1994 – and drop in refinery utilization rates led to the 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 428,000 barrels from the previous week’s level to 42.97 million barrels. Stocks are currently just under the all-time high of 47.78 million barrels reached in June.

At 374.85 million barrels, current crude supplies are 10.9% 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 25.2 days in the previous week to 25.4 days. In the year-ago period, the supply cover was 23.3 days.

Gasoline: Supplies of gasoline were up for the fourth consecutive week, as domestic consumption tumbled and U.S. Gulf Coast inventories jumped following a pipeline shut-in from Hurricane Sandy. This was partially offset by falling imports.

The 2.88 million barrels gain – contrary to analyst projections for a decline in supply level – took gasoline stockpiles up to 202.38 million barrels. However, notwithstanding this build, the existing inventory level of the most widely used petroleum product is still 0.9% off the year-earlier levels and is in the middle of the average range.

Distillate: Distillate fuel supplies (including diesel and heating oil) gained 131,000 barrels last week, as against than analyst expectations for a 2 million barrels decrease in inventory level. The marginal increase in distillate fuel stocks – the first in 8 weeks – could be attributed to higher imports and production, partially offset by stronger demand.

At 118.06 million barrels, distillate supplies are 13.1% 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 was down 2.3% from the prior week to 85.4%, as Hurricane Sandy forced several facilities to shut down or scale back operations.. The analysts were expecting the refinery run rate to decline by 1.5%.