U.S. oil prices climbed yesterday, as hefty declines in gasoline and distillate supplies outweighed surging crude inventories. On the New York Mercantile Exchange, WTI crude futures edged up 43 cents or 0.7%, to settle at $64.44 a barrel on Wednesday.
Below we review the EIA's Weekly Petroleum Status Report for the holiday-shortened week ending Mar 5. Analyzing the Latest EIA Report Crude Oil: The federal government’s EIA report revealed that crude inventories surged by 13.8 million barrels compared with expectations of a 2.7-million-barrel increase. A rebound in domestic production from February’s winter storm-led shut-ins primarily accounted for the massive stockpile build with the world’s biggest oil consumer. This puts total domestic stocks at 498.4 million barrels — 10.3% more than the year-ago figure and 6% higher than the five-year average. The latest report also showed that supplies at the Cushing terminal (the key delivery hub for U.S. crude futures traded on the New York Mercantile Exchange) increased 526,000 barrels to 48.8 million barrels. Meanwhile, the crude supply cover was up from 37.5 days in the previous week to 40.5 days. In the year-ago period, the supply cover was 28.4 days. Let’s turn to the products now. Gasoline: Gasoline supplies decreased significantly for the second successive week. The 11.9-million-barrel draw is attributable to rising demand. Analysts had forecast gasoline inventories to fall by 4.8 million barrels. At 231.6million barrels — the lowest since November — the current stock of the most widely used petroleum product is 6.2% less than the year-earlier level and 6% below the five-year average range. Distillate: Distillate fuel supplies (including diesel and heating oil) fell for the seventh week in a row. The 5.5-million-barrel decrease reflected ramped-up usage. Meanwhile, the market looked for a supply decline of 3.8 million barrels.Current inventories — at 137.5 million barrels — are 7.3% higher than the year-ago level but 4% less than the five-year average. Refinery Rates: Refinery utilization was up13% from the prior week to 69%. Wrapping Up
Oil prices settled marginally higher on Wednesday to snap a two-session streak of losses as product inventories plunged, pointing to the improving fundamentals in the fuel market. While gasoline supplies declined to a four-month low, consumption was up to its highest since November.
The commodity had spent much of the past few months trading higher on continued vaccine-related developments and their successful deployment around the world that offers hope for an earlier-than-expected pickup in the commodity’s demand. Oil has been driven up further after major oil producers maintained their output cuts till the end of April contrary to expectations of a slight increase. Last week, the OPEC+ alliance decided to continue withholding production by around 7 million barrels per day (or about 7% of the global consumption) through next month. Moreover, OPEC-kingpin Saudi Arabia pledged to extend its voluntary supply curbs of 1 million barrels per day. Easing coronavirus infections, signs of robust demand in the world’s second-largest oil consumer, China, and the passage of the $1.9 trillion stimulus bill are the other positives in the oil story. The renewed enthusiasm can be gauged from the fact that the Zacks Oil/Energy sector has gained 41.4% in the past six months, handily outperforming the S&P 500 Index’s 15.5% appreciation.
Energy Stocks Soar
Yesterday’s EIA figures pushed the Energy Select Sector SPDR — an assortment of the largest U.S. energy companies — up more than 2.5% to be at the top of the S&P sector standings. In fact, some of the top gainers of the S&P 500 included energy-related names like
Valero Energy ( VLO Quick Quote VLO - Free Report) , HollyFrontier ( HFC Quick Quote HFC - Free Report) , TechnipFMC ( FTI Quick Quote FTI - Free Report) , ONEOK ( OKE Quick Quote OKE - Free Report) and Marathon Petroleum ( MPC Quick Quote MPC - Free Report) . Valero — carrying a Zacks Rank of #2 (Buy) — was the top-performing stock with a gain of 6.25%, followed by HollyFrontier (5.57%), TechnipFMC (4.84%), ONEOK (4.75%) and Marathon Petroleum (4.13%). Meanwhile, the only energy representative in the 30-stock Dow Jones industrial average, Chevron ( CVX Quick Quote CVX - Free Report) was up 1.71%. You can see . the complete list of today’s Zacks #1 Rank stocks here Breakout Biotech Stocks with Triple-Digit Profit Potential
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