U.S. oil prices fell on Thursday after a weekly report from the Energy Information Administration ("EIA") revealed big additions to gasoline and distillate stockpiles.

On the New York Mercantile Exchange, WTI crude futures lost 84 cents, or 1.2%, to close at $71.86 a barrel yesterday.

We believe that oil’s current levels of just over $70 allow long-term-oriented market participants to buy shares in quality companies at attractive prices. Investors interested in the sector could benefit from having quality stocks like Murphy USA (MUSA Quick QuoteMUSA - Free Report) , Nine Energy Service (NINE Quick QuoteNINE - Free Report) and Oceaneering International (OII Quick QuoteOII - Free Report) in their portfolios.

Let's dig deep into EIA’s Weekly Petroleum Status Report for the holiday-shortened week ending Dec 29.

Analyzing the Latest EIA Report

Crude Oil: The federal government’s EIA report revealed that crude inventories fell 5.5 million barrels compared to expectations of a 4 million-barrel decrease per the analysts surveyed by S&P Global Commodity Insights. The higher-than-expected stockpile draw with the world’s biggest oil consumer was largely thanks to a combination of stronger refiner demand and higher exports, which more than offset continued high domestic production, which at 13.2 million barrels per day, is near all-time highs.

Total domestic stock now stands at 431.1 million barrels — 2.5% higher than the year-ago figure of 420.6 million barrels but 2% less than the five-year average.

However, on a slightly 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) edged up 706,000 barrels to 34.7 million barrels — the highest since July 2023.

Meanwhile, the crude supply cover decreased from 26.7 days in the previous week to 26.2 days. In the year-ago period, the supply cover was 27.1 days.

Let’s turn to the products now.

Gasoline: Gasoline supplies increased for the sixth time in seven weeks. The 10.9-million-barrel jump was primarily attributable to a pullback in exports and demand. Analysts had forecast that gasoline inventories would gain 2.3 million barrels. At 237 million barrels, the current stock of the most widely used petroleum product is 6.4% more than the year-earlier level, while it is slightly above the five-year average range.

Distillate: Distillate fuel supplies (including diesel and heating oil) rose for the sixth time in as many weeks. The 10.1 million-barrel surge mainly reflected a steep drop in consumption and strong production. Meanwhile, the market looked for a supply build of 2.6 million barrels. Following last week’s addition, current inventories — at 125.9 million barrels — are 6% above the year-ago level but 6% lower than the five-year average.

Refinery Rates: Refinery utilization, at 93.5%, rose 0.2% from the prior week.

3 Energy Stocks to Buy

Having gone through the Weekly Petroleum Status Report, investors interested in the energy space might consider the operators mentioned below. Each of these companies currently carries a Zacks Rank #1 (Strong Buy).

You can see the complete list of today’s Zacks #1 Rank stocks here.

Murphy USA: Murphy USA beat the Zacks Consensus Estimate for earnings in two of the trailing four quarters and missed in the other two. It has a trailing four-quarter earnings surprise of 7%, on average.

Murphy USA is valued at around $7.6 billion. The company has seen its shares gain 40.3% in a year.

Nine Energy Service: Over the past 60 days, NINE saw the Zacks Consensus Estimate for 2023 move up 9%. The oilfield service provider has a Value Score of A.

Nine Energy Services’ current market cap is roughly $94.7 million. NINE has seen its shares drop 80.3% in a year.

Oceaneering International: The 2023 Zacks Consensus Estimate for OII indicates 177.4% year-over-year earnings per unit growth.

Oceaneering is valued at around $2.1 billion. OII has seen its units rise 17.3% in a year.