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The U.S. Energy Department's inventory release showed that crude stockpiles declined for the fifth straight week, continuing to drag down the overall surplus. However, total stocks still remain at historically high levels for this time of year.

The report further revealed that gasoline inventories rose slightly from previous week, while distillate stocks recorded a bigger-than-expected fall. Meanwhile, refinery activity slowed.

Analysis of the EIA Data

Crude Oil: The federal government’s EIA report revealed that crude inventories fell by 2.98 million barrels for the week ending Sep 30, 2016, following a decline of 1.88 million barrels in the previous week.

The analysts surveyed by S&P Global Platts – the leading independent commodities and energy data provider – had expected crude stocks to go up some 2 million barrels. A drop in imports and production led to the surprise stockpile draw with the world's biggest oil consumer even as refinery activity slowed.

Following the fifth straight inventory reduction, the year-over-year storage surplus has narrowed down considerably. However, U.S. still remains awash with excess oil. At 499.74 million barrels, current crude supplies are up 8% from the year-ago period and are at the highest level during this time of the year.

While overall crude inventories continued with its run of drawdowns, stocks at the Cushing terminal in Oklahoma – the key delivery hub for U.S. crude futures traded on the New York Mercantile Exchange – was up 569,000 barrels from previous week’s level to 62.65 million barrels.

The crude supply cover was up from 30.2 days in the previous week to 30.4 days. In the year-ago period, the supply cover was 28.7 days.

Gasoline: Supplies of gasoline were up for the third time in 4 weeks on rising imports and production, partly offset by strengthening demand. The 222,000 barrels build – below the analysts’ polled number of 500,000 barrels increase in supply level – took gasoline stockpiles up to 227.41 million barrels. Following last week’s increase, the existing stock of the most widely used petroleum product is 2% higher than the year-earlier level and is above the upper half of the average range.

Distillate: Distillate fuel supplies (including diesel and heating oil) fell by 2.36 million barrels last week, trumping analysts’ expectations for a 1.7 million barrels decline. The decrease in distillate fuel stocks – for the second successive week – could be attributed to a fall in imports, assisted by higher demand. At 160.72 million barrels, distillate supplies are 8% higher than the year-ago level and are over the upper half of the average range for this time of the year.

Refinery Rates: Refinery utilization was down by 1.8% from the prior week to 88.3%.

About the Weekly Petroleum Status Report

The Energy Information Administration (EIA) Petroleum Status Report, containing data of the previous week ending Friday, outlines information regarding the weekly change in petroleum inventories held and produced by the U.S., both locally and abroad.

The report provides an overview of the level of reserves and their movements, thereby helping investors understand the demand/supply dynamics of petroleum products. It is an indicator of current oil prices and volatility that affect the businesses of the companies engaged in the oil and refining industry.

The data from EIA generally acts as a catalyst for crude prices and affect producers, such as Exxon Mobil Corp. (XOM - Analyst Report) , Chevron Corp. (CVX - Analyst Report) and ConocoPhillips (COP - Analyst Report) , and refiners such as Valero Energy Corp. (VLO - Analyst Report) , Phillips 66 (PSX - Analyst Report) and HollyFrontier Corp. (HFC - Snapshot Report) .

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