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The U.S. Energy Department's weekly inventory release showed that crude stockpiles jumped to hit their highest level since 1990. However, the report further revealed that refined product inventories – gasoline and distillate – declined from their previous week levels. Meanwhile, refiners scaled up their utilization rates by 0.6%.

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.

Analysis of the Data

Crude Oil: The federal government’s EIA report revealed that crude inventories rose by 2.71 million barrels for the week ending Mar 29, 2013, following a climb of 3.26 million barrels in the previous week.

The analysts surveyed by Platts – the energy information arm of McGraw-Hill Companies Inc. , had expected crude stocks to go up some 2.5 million barrels. Strong domestic production led to the stockpile build-up with the world's biggest oil consumer even as imports fell and refinery utilization rates improved.

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 – was down 287,000 barrels from the previous week’s level to 49.18 million barrels. Stocks are currently just under the all-time high of 51.86 million barrels reached in January.

Following the weekly inventory increase, at 388.62 million barrels, current crude supplies are 7.2% 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 down from 26.9 days in the previous week to 26.6 days. In the year-ago period, the supply cover was 25.0 days.

Gasoline: Supplies of gasoline were down for the eighth time in as many weeks, as domestic consumption strengthened and production fell. This was partially offset by higher imports.

The 580,000 barrels withdrawal – way off analysts’ projections for a 1.25 million-barrel decrease in supply level – took gasoline stockpiles down to 220.66 million barrels. Following this drawdown, the existing inventory level of the most widely used petroleum product is 0.5% lower than the year-earlier level despite being in the middle of the average range.

Distillate: Distillate fuel supplies (including diesel and heating oil) were down 2.27 million barrels last week, significantly above analysts’ expectations for a 1 million barrels drop in inventory level. The decrease in distillate fuel stocks – the fourth in 5 weeks – could be attributed to lower imports, partially offset by weaker demand and higher production.

At 112.99 million barrels, distillate supplies are 16.8% 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 up 0.6% from the prior week to 86.3%. The analysts were expecting the refinery run rate to increase 0.5% to 86.2%.

Zacks Rank

A bullish data from the EIA generally acts as a positive catalyst for crude prices and buoy producers, such as Exxon Mobil Corp. (XOM - Analyst Report), Chevron Corp. (CVX - Analyst Report) and ConocoPhillips (COP - Analyst Report). With an improvement in the companies’ ability to generate positive earnings surprises, they can then move higher from their current Zacks Rank #3 (Hold).
 

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