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Inventory Draw on All Fronts, Fed Stance Push Oil Higher
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U.S. oil prices moved higher on Dec 8 after a weekly report from the Energy Information Administration ("EIA") showed draws in crude and fuel stockpiles. The hawkish tone from the Federal Reserve, indicating a quick wind-up of its monthly bond purchases in an attempt to tackle inflation, also boosted the commodity.
On the New York Mercantile Exchange, WTI crude futures gained 14 cents, or 0.2%, to settle at $70.87 a barrel.
Below we review the EIA's Weekly Petroleum Status Report for the week ending Dec 10.
Analyzing the Latest EIA Report
Crude Oil: The federal government’s EIA report revealed that crude inventories fell 4.6 million barrels compared to expectations of a 1.7 million-barrel decrease per the analysts surveyed by S&P Global Platts. A sharp pullback in exports primarily accounted for the larger-than-expected stockpile draw with the world’s biggest oil consumer. Total domestic stocks now stand at 428.3 million barrels — 14.4% less than the year-ago figure and 7% lower than the five-year average.
On a somewhat bearish 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) increased 1.3 million barrels to 32.2 million barrels.
Meanwhile, the crude supply cover was down from 27.7 days in the previous week to 27.3 days. In the year-ago period, the supply cover was 35.2 days.
Let’s turn to the products now.
Gasoline: Gasoline supplies decreased for the first time in three weeks. The 719,000-barrel drop is attributable to higher demand. Analysts had forecast that gasoline inventories would rise by 200,000 barrels. At 218.6 million barrels, the current stock of the most widely used petroleum product is 8.5% less than the year-earlier level and 6% below the five-year average range.
Distillate: Distillate fuel supplies (including diesel and heating oil) fell last week after climbing twice in a row. The 2.9-million-barrel decrease primarily reflected surging demand. Meanwhile, the market looked for a supply draw of 400,000 barrels. Current inventories — at 123.8 million barrels — are 18.2% below the year-ago level and 9% lower than the five-year average.
Refinery Rates: Refinery utilization, at 89.8%, remained flat with the prior week.
Final Words
WTI settled slightly higher yesterday, as the U.S. central bank chalked out a plan for ending its pandemic-era soft monetary policy amid red-hot inflation. The commodity also gained ground following a higher-than-expected dip in crude, gasoline and distillate inventories, pointing to the robust fundamentals in the Oil/Energy market. In particular, the last four-week average for petroleum demand stands at an all-time high of 23.2 million barrels a day, nearly 20% above year-ago levels. This indicates surging consumption of gasoline, diesel and other refined products as fears of a slowdown in oil demand recovery from the Omicron variant appears to subside with the strain likely to be less deadly than expected. At the same time, available vaccines might be effective in neutralizing it.
To take advantage of oil’s solid demand backdrop, one might build a position by tapping into the below-mentioned Zacks Rank #1 (Strong Buy) oil companies.
ConocoPhillips (COP - Free Report) : ConocoPhillips has a projected earnings growth rate of 717.5% for the current year. The Zacks Consensus Estimate for COP’s current-year earnings has been revised 17.2% upward over the past 60 days.
ConocoPhillips beat the Zacks Consensus Estimate for earnings in each of the trailing four quarters, the average being 13%. COP shares have gained around 72.3% in a year.
Phillips 66 (PSX - Free Report) : Phillips 66 has an expected earnings growth rate of 532.6% for the current year. The Zacks Consensus Estimate for PSX's current-year earnings has been revised 57.1% upward over the last 60 days.
Phillips 66 beat the Zacks Consensus Estimate for earnings in three of the last four quarters but missed once. It has a trailing four-quarter earnings surprise of roughly 19.7%, on average. PSX has gained around 9.7% in a year.
Occidental Petroleum (OXY - Free Report) : Occidental Energy has an expected earnings growth rate of 152.9% for the current year. The Zacks Consensus Estimate for Occidental Energy's current-year earnings has been revised 33.5% upward over the last 60 days.
Occidental Energy beat the Zacks Consensus Estimate for earnings in two of the last four quarters. OXY has a trailing four-quarter earnings surprise of roughly 13.7%, on average. The U.S. oil behemoth has rallied around 46.9% in a year.
PDC Energy : The company has a projected earnings growth rate of 286.7% for the current year. PDC Energy’s consensus estimate for the current year has been revised 25% upward over the past 60 days.
PDCE beat the Zacks Consensus Estimate for earnings in each of the trailing four quarters, the average being 51.1%. PDC Energy has rallied around 183% in a year.
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Inventory Draw on All Fronts, Fed Stance Push Oil Higher
U.S. oil prices moved higher on Dec 8 after a weekly report from the Energy Information Administration ("EIA") showed draws in crude and fuel stockpiles. The hawkish tone from the Federal Reserve, indicating a quick wind-up of its monthly bond purchases in an attempt to tackle inflation, also boosted the commodity.
On the New York Mercantile Exchange, WTI crude futures gained 14 cents, or 0.2%, to settle at $70.87 a barrel.
Below we review the EIA's Weekly Petroleum Status Report for the week ending Dec 10.
Analyzing the Latest EIA Report
Crude Oil: The federal government’s EIA report revealed that crude inventories fell 4.6 million barrels compared to expectations of a 1.7 million-barrel decrease per the analysts surveyed by S&P Global Platts. A sharp pullback in exports primarily accounted for the larger-than-expected stockpile draw with the world’s biggest oil consumer. Total domestic stocks now stand at 428.3 million barrels — 14.4% less than the year-ago figure and 7% lower than the five-year average.
On a somewhat bearish 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) increased 1.3 million barrels to 32.2 million barrels.
Meanwhile, the crude supply cover was down from 27.7 days in the previous week to 27.3 days. In the year-ago period, the supply cover was 35.2 days.
Let’s turn to the products now.
Gasoline: Gasoline supplies decreased for the first time in three weeks. The 719,000-barrel drop is attributable to higher demand. Analysts had forecast that gasoline inventories would rise by 200,000 barrels. At 218.6 million barrels, the current stock of the most widely used petroleum product is 8.5% less than the year-earlier level and 6% below the five-year average range.
Distillate: Distillate fuel supplies (including diesel and heating oil) fell last week after climbing twice in a row. The 2.9-million-barrel decrease primarily reflected surging demand. Meanwhile, the market looked for a supply draw of 400,000 barrels. Current inventories — at 123.8 million barrels — are 18.2% below the year-ago level and 9% lower than the five-year average.
Refinery Rates: Refinery utilization, at 89.8%, remained flat with the prior week.
Final Words
WTI settled slightly higher yesterday, as the U.S. central bank chalked out a plan for ending its pandemic-era soft monetary policy amid red-hot inflation. The commodity also gained ground following a higher-than-expected dip in crude, gasoline and distillate inventories, pointing to the robust fundamentals in the Oil/Energy market. In particular, the last four-week average for petroleum demand stands at an all-time high of 23.2 million barrels a day, nearly 20% above year-ago levels. This indicates surging consumption of gasoline, diesel and other refined products as fears of a slowdown in oil demand recovery from the Omicron variant appears to subside with the strain likely to be less deadly than expected. At the same time, available vaccines might be effective in neutralizing it.
To take advantage of oil’s solid demand backdrop, one might build a position by tapping into the below-mentioned Zacks Rank #1 (Strong Buy) oil companies.
You can see the complete list of today’s Zacks #1 Rank stocks here.
ConocoPhillips (COP - Free Report) : ConocoPhillips has a projected earnings growth rate of 717.5% for the current year. The Zacks Consensus Estimate for COP’s current-year earnings has been revised 17.2% upward over the past 60 days.
ConocoPhillips beat the Zacks Consensus Estimate for earnings in each of the trailing four quarters, the average being 13%. COP shares have gained around 72.3% in a year.
Phillips 66 (PSX - Free Report) : Phillips 66 has an expected earnings growth rate of 532.6% for the current year. The Zacks Consensus Estimate for PSX's current-year earnings has been revised 57.1% upward over the last 60 days.
Phillips 66 beat the Zacks Consensus Estimate for earnings in three of the last four quarters but missed once. It has a trailing four-quarter earnings surprise of roughly 19.7%, on average. PSX has gained around 9.7% in a year.
Occidental Petroleum (OXY - Free Report) : Occidental Energy has an expected earnings growth rate of 152.9% for the current year. The Zacks Consensus Estimate for Occidental Energy's current-year earnings has been revised 33.5% upward over the last 60 days.
Occidental Energy beat the Zacks Consensus Estimate for earnings in two of the last four quarters. OXY has a trailing four-quarter earnings surprise of roughly 13.7%, on average. The U.S. oil behemoth has rallied around 46.9% in a year.
PDC Energy : The company has a projected earnings growth rate of 286.7% for the current year. PDC Energy’s consensus estimate for the current year has been revised 25% upward over the past 60 days.
PDCE beat the Zacks Consensus Estimate for earnings in each of the trailing four quarters, the average being 51.1%. PDC Energy has rallied around 183% in a year.