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Oil Falls After EIA Reports Inventory Build on All Fronts
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U.S. oil prices fell yesterday after U.S. government data showed a weekly build in crude, gasoline and distillate supplies. A rise in stocks across the board together with little chance of an oil supercycle dragged WTI crude futures, which edged down 20 cents or 0.3%, to settle at $64.60 a barrel on Wednesday.
Below we review the EIA's Weekly Petroleum Status Report for the holiday-shortened week ending Mar12.
Analyzing the Latest EIA Report
Crude Oil: The federal government’s EIA report revealed that crude inventories rose by 2.4 million barrels compared with expectations of a 400,000-barrels increase. The continued revival in domestic production from February’s winter storm-led shut-ins and the underwhelming recovery in refinery demand primarily accounted for the higher-than-expected stockpile build with the world’s biggest oil consumer. This puts total domestic stocks at 500.8 million barrels — 10.4% more than the year-ago figure and 6% higher than the five-year average.
On a somewhat positive note, the latest report showed that supplies at the Cushing terminal (the key delivery hub for U.S. crude futures traded on the New York Mercantile Exchange) fell 624,000 barrels to 48.2 million barrels.
Meanwhile, the crude supply cover was up from 40.5 days in the previous week to 41.8 days. In the year-ago period, the supply cover was 28.7 days.
Let’s turn to the products now.
Gasoline: Gasoline supplies increased for the first time in three weeks. The 472,000-barrels build is attributable to stuttering demand. Analysts had forecast gasoline inventories to fall by 1.4 million barrels. At 232.1 million barrels, the current stock of the most widely used petroleum product is 3.6% less than the year-earlier level and 4% below the five-year average range.
Distillate: Distillate fuel supplies (including diesel and heating oil) rose last week after falling for seven weeks in a row. The 255,000-barrels increase reflected ramped-down usage. Meanwhile, the market looked for a supply decline of 900,000 barrels. Current inventories — at 137.7 million barrels — are 10.1% higher than the year-ago level but 2% less than the five-year average.
Refinery Rates: Refinery utilization was up 7.1% from the prior week to 76.1%.
Wrapping Up
Oil prices settled marginally lower on Wednesday as crude and product inventories rose, pointing to the still-fragile fundamentals in the energy market. Selling pressure was also fueled by a report from the Paris-based International Energy Agency ("IEA"), which dashed hopes of an oil supercycle (or a sustained period of rising prices), suggesting ample supplies.
The commodity, however, 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 was driven up further after major oil producers maintained their output cuts till the end of April contrary to expectations of a slight increase. Recently, 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 21.3% so far this year, handily outperforming the S&P 500 Index’s 5.9% appreciation. Further, the Energy Select Sector SPDR — an assortment of the largest U.S. energy companies — is up nearly37% during this period to be at the top of the S&P sector standings.
In fact, some of the major gainers of the S&P 500 this year include energy-related names like Marathon Oil (MRO - Free Report) , Diamondback Energy (FANG - Free Report) , Occidental Petroleum (OXY - Free Report) , Devon Energy (DVN - Free Report) and HollyFrontier .
Marathon Oil is the top-performing stock with a gain of 74.81%, followed by Diamondback (68.20%), Occidental (67.76%), Devon (50.94%) and HollyFrontier (49.44%). Meanwhile, the only energy representative in the 30-stock Dow Jones industrial average, Chevron (CVX - Free Report) , carrying a Zacks Rank of #1 (Strong Buy) — is up 27.9%.
In addition to the stocks discussed above, would you like to know about our 10 best buy-and-hold tickers for the entirety of 2021?
Last year's 2020 Zacks Top 10 Stocks portfolio returned gains as high as +386.8%. Now a brand-new portfolio has been handpicked from over 4,000 companies covered by the Zacks Rank. Don’t miss your chance to get in on these long-term buys.
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Oil Falls After EIA Reports Inventory Build on All Fronts
U.S. oil prices fell yesterday after U.S. government data showed a weekly build in crude, gasoline and distillate supplies. A rise in stocks across the board together with little chance of an oil supercycle dragged WTI crude futures, which edged down 20 cents or 0.3%, to settle at $64.60 a barrel on Wednesday.
Below we review the EIA's Weekly Petroleum Status Report for the holiday-shortened week ending Mar12.
Analyzing the Latest EIA Report
Crude Oil: The federal government’s EIA report revealed that crude inventories rose by 2.4 million barrels compared with expectations of a 400,000-barrels increase. The continued revival in domestic production from February’s winter storm-led shut-ins and the underwhelming recovery in refinery demand primarily accounted for the higher-than-expected stockpile build with the world’s biggest oil consumer. This puts total domestic stocks at 500.8 million barrels — 10.4% more than the year-ago figure and 6% higher than the five-year average.
On a somewhat positive note, the latest report showed that supplies at the Cushing terminal (the key delivery hub for U.S. crude futures traded on the New York Mercantile Exchange) fell 624,000 barrels to 48.2 million barrels.
Meanwhile, the crude supply cover was up from 40.5 days in the previous week to 41.8 days. In the year-ago period, the supply cover was 28.7 days.
Let’s turn to the products now.
Gasoline: Gasoline supplies increased for the first time in three weeks. The 472,000-barrels build is attributable to stuttering demand. Analysts had forecast gasoline inventories to fall by 1.4 million barrels. At 232.1 million barrels, the current stock of the most widely used petroleum product is 3.6% less than the year-earlier level and 4% below the five-year average range.
Distillate: Distillate fuel supplies (including diesel and heating oil) rose last week after falling for seven weeks in a row. The 255,000-barrels increase reflected ramped-down usage. Meanwhile, the market looked for a supply decline of 900,000 barrels. Current inventories — at 137.7 million barrels — are 10.1% higher than the year-ago level but 2% less than the five-year average.
Refinery Rates: Refinery utilization was up 7.1% from the prior week to 76.1%.
Wrapping Up
Oil prices settled marginally lower on Wednesday as crude and product inventories rose, pointing to the still-fragile fundamentals in the energy market. Selling pressure was also fueled by a report from the Paris-based International Energy Agency ("IEA"), which dashed hopes of an oil supercycle (or a sustained period of rising prices), suggesting ample supplies.
The commodity, however, 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 was driven up further after major oil producers maintained their output cuts till the end of April contrary to expectations of a slight increase. Recently, 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 21.3% so far this year, handily outperforming the S&P 500 Index’s 5.9% appreciation. Further, the Energy Select Sector SPDR — an assortment of the largest U.S. energy companies — is up nearly37% during this period to be at the top of the S&P sector standings.
In fact, some of the major gainers of the S&P 500 this year include energy-related names like Marathon Oil (MRO - Free Report) , Diamondback Energy (FANG - Free Report) , Occidental Petroleum (OXY - Free Report) , Devon Energy (DVN - Free Report) and HollyFrontier .
Marathon Oil is the top-performing stock with a gain of 74.81%, followed by Diamondback (68.20%), Occidental (67.76%), Devon (50.94%) and HollyFrontier (49.44%). Meanwhile, the only energy representative in the 30-stock Dow Jones industrial average, Chevron (CVX - Free Report) , carrying a Zacks Rank of #1 (Strong Buy) — is up 27.9%.
You can see the complete list of today’s Zacks #1 Rank stocks here.
Zacks Top 10 Stocks for 2021
In addition to the stocks discussed above, would you like to know about our 10 best buy-and-hold tickers for the entirety of 2021?
Last year's 2020 Zacks Top 10 Stocks portfolio returned gains as high as +386.8%. Now a brand-new portfolio has been handpicked from over 4,000 companies covered by the Zacks Rank. Don’t miss your chance to get in on these long-term buys.
Access Zacks Top 10 Stocks for 2021 today >>