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The U.S. Energy Department's weekly inventory release showed that crude stockpiles notched up to another all-time high level, as production hit the maximum in 21 years. The report further revealed that within the ‘refined products’ category, gasoline stocks fell, while distillate supplies were up from the week-ago level. Meanwhile, refiners scaled up their utilization rates by 2.6%.

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 230,000 barrels for the week ending May 3, 2013, following a jump of 6.70 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 climb some 1.9 million barrels. An increase in the level of domestic production – to their highest level since Feb 1992 – led to the modest stockpile build-up with the world's biggest oil consumer even as refiners improved their utilization rates and imports pulled back sharply.

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 – were down 652,000 barrels from the previous week’s level to 49.15 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 395.51 million barrels, current crude supplies are 4.2% above the year-earlier level, and comfortably exceed the upper limit of the average for this time of the year. The crude supply cover remained flat from the previous week at 26.6 days. In the year-ago period, the supply cover was 26.0 days.

Gasoline: Supplies of gasoline were down for the twelfth time in 13 weeks, as domestic consumption strengthened and production fell. This was partially offset by higher imports.

The 910,000 barrels withdrawal – ahead of analysts’ projections for a 750,000 barrels decrease in supply level – took gasoline stockpiles down to 215.07 million barrels. Notwithstanding this drawdown, the existing inventory level of the most widely used petroleum product is 3.9% higher than the year-earlier level and is midway through the average range.

Distillate: Distillate fuel supplies (including diesel and heating oil) were up 1.81 million barrels last week, above analysts’ expectations for a 1 million barrels gain in inventory level. The increase in distillate fuel stocks – the fourth in as many weeks – could be attributed to higher production, partially offset by decline in imports.

At 117.56 million barrels, distillate supplies are 2.6% 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 2.6% from the prior week to 87.0%. The analysts were expecting the refinery run rate to increase 0.6% to 85.0%.

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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