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Oil Stocks Rattled by Rising Gasoline Supplies, Delta Scare
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U.S. oil prices slid on Aug 18, as a surprise build-up in gasoline inventories and worries over a slowdown in energy demand from the spread of the coronavirus delta variant outweighed the larger-than-expected fall in domestic oil stocks.
On the New York Mercantile Exchange, WTI crude futures moved down $1.13 or 1.7%, to settle at $65.46 a barrel, its highest finish since May 21.
Below we review the EIA's Weekly Petroleum Status Report for the week ending Aug 13.
Analyzing the Latest EIA Report
Crude Oil: The federal government’s EIA report revealed that crude inventories fell by 3.2 million barrels compared to expectations of a 3.1-million-barrel decline per the analysts surveyed by S&P Global Platts. A surge in exports primarily accounted for the stockpile draw with the world’s biggest oil consumer even as refinery demand was down slightly. This puts total domestic stocks at 435.5 million barrels — 15% less than the year-ago figure and 6% lower 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) declined 980,000 barrels at 33.6 million barrels.
Meanwhile, the crude supply cover was down from 27.4 days in the previous week to 27.2 days. In the year-ago period, the supply cover was 35.1 days.
Let’s turn to the products now.
Gasoline: Gasoline supplies increased for the first time in five weeks. The 696,000-barrel addition is attributable to a dip in consumption. Analysts had forecast that gasoline inventories would fall by 2.3 million barrels. At 228.2 million barrels, the current stock of the most widely used petroleum product is 6.4% less than the year-earlier level and 3% below the five-year average range.
Distillate: Distillate fuel supplies (including diesel and heating oil) fell last week after rising for two weeks in a row. The 2.7-million-barrel fall reflected an uptick in demand. Meanwhile, the market looked for a supply gain of 700,000 barrels. Current inventories — at 137.8 million barrels — are 22.5% below the year-ago level and 8% lower than the five-year average.
Refinery Rates: Refinery utilization, at 92.2%, was up 0.4% from the prior week.
Wrapping Up
Oil prices settled lower yesterday, following a surprise build in gasoline inventories due to a decrease in consumption. While the overall Oil/Energy market sentiment remains positive on a continued decline in U.S. commercial stockpiles — down more than 13% since mid-March — the increase in gasoline supplies is a troubling sign for crude demand. Fears of a slowdown in oil demand recovery amid a spike in the fast-spreading delta virus variant (particularly in China) also dragged down the commodity on Wednesday.
These factors were enough to push the Energy Select Sector SPDR — an assortment of the largest U.S. companies thronging the space — down 2.08% to be at the bottom of the S&P sector standings. Consequently, some of the biggest casualties of the S&P 500 included energy-related names like Chevron (CVX - Free Report) , Marathon Oil (MRO - Free Report) , Diamondback Energy (FANG - Free Report) , Devon Energy (DVN - Free Report) , Occidental Petroleum (OXY - Free Report) and Phillips 66 (PSX - Free Report) .
Chevron, carrying a Zacks Rank of #3 (Hold), was the worst-performing energy stock with a fall of 4%. Other notable losers include Marathon (3.05%), Diamondback (2.88%), Devon (2.86%), Occidental (2.62%) and Phillips 66 (2.60%).
Image: Bigstock
Oil Stocks Rattled by Rising Gasoline Supplies, Delta Scare
U.S. oil prices slid on Aug 18, as a surprise build-up in gasoline inventories and worries over a slowdown in energy demand from the spread of the coronavirus delta variant outweighed the larger-than-expected fall in domestic oil stocks.
On the New York Mercantile Exchange, WTI crude futures moved down $1.13 or 1.7%, to settle at $65.46 a barrel, its highest finish since May 21.
Below we review the EIA's Weekly Petroleum Status Report for the week ending Aug 13.
Analyzing the Latest EIA Report
Crude Oil: The federal government’s EIA report revealed that crude inventories fell by 3.2 million barrels compared to expectations of a 3.1-million-barrel decline per the analysts surveyed by S&P Global Platts. A surge in exports primarily accounted for the stockpile draw with the world’s biggest oil consumer even as refinery demand was down slightly. This puts total domestic stocks at 435.5 million barrels — 15% less than the year-ago figure and 6% lower 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) declined 980,000 barrels at 33.6 million barrels.
Meanwhile, the crude supply cover was down from 27.4 days in the previous week to 27.2 days. In the year-ago period, the supply cover was 35.1 days.
Let’s turn to the products now.
Gasoline: Gasoline supplies increased for the first time in five weeks. The 696,000-barrel addition is attributable to a dip in consumption. Analysts had forecast that gasoline inventories would fall by 2.3 million barrels. At 228.2 million barrels, the current stock of the most widely used petroleum product is 6.4% less than the year-earlier level and 3% below the five-year average range.
Distillate: Distillate fuel supplies (including diesel and heating oil) fell last week after rising for two weeks in a row. The 2.7-million-barrel fall reflected an uptick in demand. Meanwhile, the market looked for a supply gain of 700,000 barrels. Current inventories — at 137.8 million barrels — are 22.5% below the year-ago level and 8% lower than the five-year average.
Refinery Rates: Refinery utilization, at 92.2%, was up 0.4% from the prior week.
Wrapping Up
Oil prices settled lower yesterday, following a surprise build in gasoline inventories due to a decrease in consumption. While the overall Oil/Energy market sentiment remains positive on a continued decline in U.S. commercial stockpiles — down more than 13% since mid-March — the increase in gasoline supplies is a troubling sign for crude demand. Fears of a slowdown in oil demand recovery amid a spike in the fast-spreading delta virus variant (particularly in China) also dragged down the commodity on Wednesday.
These factors were enough to push the Energy Select Sector SPDR — an assortment of the largest U.S. companies thronging the space — down 2.08% to be at the bottom of the S&P sector standings. Consequently, some of the biggest casualties of the S&P 500 included energy-related names like Chevron (CVX - Free Report) , Marathon Oil (MRO - Free Report) , Diamondback Energy (FANG - Free Report) , Devon Energy (DVN - Free Report) , Occidental Petroleum (OXY - Free Report) and Phillips 66 (PSX - Free Report) .
Chevron, carrying a Zacks Rank of #3 (Hold), was the worst-performing energy stock with a fall of 4%. Other notable losers include Marathon (3.05%), Diamondback (2.88%), Devon (2.86%), Occidental (2.62%) and Phillips 66 (2.60%).
You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.