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The U.S. Energy Department's weekly inventory release showed that crude stockpiles logged an increase, as imports climbed and refinery demand weakened. The report further revealed that refined product inventories – gasoline and distillate – soared from their previous week levels on weakening demand.

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, 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 1.31 million barrels for the week ending January 4, 2013, following a plunge of 11.12 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 1.5 million barrels. A steep climb in the level of imports and drop in refinery utilization rates led to the stockpile build-up with the world's biggest oil consumer. Additionally, domestic production continued to spike, now at their highest level since 1993.

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 – was up 332,000 barrels from the previous week’s level to hit a new all-time high of 50.08 million barrels.

At 361.25 million barrels, current crude supplies are 8.0% above the year-earlier level, and comfortably exceed the upper limit of the average for this time of the year. The crude supply cover was up slightly from 23.4 days in the previous week to 23.5 days. In the year-ago period, the supply cover was 22.7 days.

Gasoline: Supplies of gasoline were up for the seventh time in as many weeks, as domestic consumption fell sharply. This was partially offset by lower imports and production.

The 7.41 million barrels jump – significantly ahead of the analysts’ projections for a 2.6 million barrels increase in supply level – took gasoline stockpiles up to 233.08 million barrels. As a result of this build, the existing inventory level of the most widely used petroleum product is 4.2% higher than the year-earlier level and is well above the upper half of the average range.

Distillate: Distillate fuel supplies (including diesel and heating oil) climbed 6.78 million barrels last week, more than 4.5 times the analysts’ expectations for a 1.5 million barrels build in inventory level. The rise in distillate fuel stocks – the fifth in 6 weeks – could be attributed to weaker demand as well as higher imports and production.

At 130.74 million barrels, distillate supplies are 11.4% below the year-ago level and are close to the lower limit of the average range for this time of the year.

Refinery Rates: Refinery utilization was down 1.3% from the prior week to 89.1%.

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