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U.S. Crude Supplies Slump but Fuel, Cushing Stocks Soar
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The U.S. Energy Department's inventory release showed that crude stockpiles fell sharply last week, dragging down the overall surplus.
But strategic supplies at the Cushing, OK storage experienced a big build. On a further bearish note, the report revealed that refined product inventories – gasoline and distillate – both surged from their previous week levels.
Confused with EIA’s mixed data set, energy traders concentrated on the positive vibes generated by the OPEC and non-OPEC countries’ agreement. They believe that the major producers will adhere to their agreed output cut quotas, which will reduce the global inventory glut next year
As a result, West Texas Intermediate (WTI) crude futures edged up 0.9% (or 50 cents) to $53.76 per barrel Thursday.
Analysis of the EIA Data
Crude Oil: The federal government’s EIA report revealed that crude inventories fell by 7.05 million barrels for the week ending Dec 30, 2016, following a modest rise of 614,000 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 down some 1.7 million barrels. Lower imports and uptick in refinery demand led to the heavy stockpile draw with the world's biggest oil consumer.
While the inventory reduction will help narrow the year-over-year storage surplus, the U.S. still remains awash with excess oil. At 479.01 million barrels, current crude supplies are up 6% from the year-ago period and are near the upper limit of the average range during this time of the year.
However, 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 1.07 million barrels from previous week’s level to 67.51 million barrels.
The crude supply cover was down from 29.4 days in the previous week to 28.9 days. In the year-ago period, the supply cover was 29.1 days.
Gasoline: Supplies of gasoline were up for the first time in 3 weeks on rising imports and weakening demand. The 8.31 million barrels jump – dwarfing analysts’ polled number of 1.5 million barrels increase in supply level – took gasoline stockpiles up to 235.45 million barrels. Following last week’s increase, the existing stock of the most widely used petroleum product is now 1.5% higher than the year-earlier level and is near the upper half of the average range.
Distillate: Distillate fuel supplies (including diesel and heating oil) went up by 10.05 million barrels last week, again significantly trumping analysts’ expectations for a 900,000-barrels rise. The surge in distillate fuel stocks could be attributed to higher production and lower demand. At 161.69 million barrels, distillate supplies are 1.4% higher than the year-ago level and are sitting over the upper half of the average range for this time of the year.
Refinery Rates: Refinery utilization was up by 1.0% from the prior week to 92.0%.
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 ExxonMobil Corp. (XOM - Free Report) , Chevron Corp. (CVX - Free Report) and ConocoPhillips (COP - Free Report) , and refiners such as Tesoro Corp. , Phillips 66 (PSX - Free Report) and HollyFrontier Corp. . However, each of these firms has a Zacks Rank #3 (Hold), which does not make them screaming buys.
While the above ideas are being shared with the public, other trades are hidden from everyone but selected members. Would you like to peek behind the curtain and view them? Starting today, for the next month, you can follow all Zacks' private buys and sells in real time from value to momentum . . . from stocks under $10 to ETF and option moves . . . from insider trades to companies that are about to report positive earnings surprises (we've called them with 80%+ accuracy). You can even look inside portfolios so exclusive that they are normally closed to new investors. Click here for Zacks' secret trades >>
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U.S. Crude Supplies Slump but Fuel, Cushing Stocks Soar
The U.S. Energy Department's inventory release showed that crude stockpiles fell sharply last week, dragging down the overall surplus.
But strategic supplies at the Cushing, OK storage experienced a big build. On a further bearish note, the report revealed that refined product inventories – gasoline and distillate – both surged from their previous week levels.
Confused with EIA’s mixed data set, energy traders concentrated on the positive vibes generated by the OPEC and non-OPEC countries’ agreement. They believe that the major producers will adhere to their agreed output cut quotas, which will reduce the global inventory glut next year
As a result, West Texas Intermediate (WTI) crude futures edged up 0.9% (or 50 cents) to $53.76 per barrel Thursday.
Analysis of the EIA Data
Crude Oil: The federal government’s EIA report revealed that crude inventories fell by 7.05 million barrels for the week ending Dec 30, 2016, following a modest rise of 614,000 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 down some 1.7 million barrels. Lower imports and uptick in refinery demand led to the heavy stockpile draw with the world's biggest oil consumer.
While the inventory reduction will help narrow the year-over-year storage surplus, the U.S. still remains awash with excess oil. At 479.01 million barrels, current crude supplies are up 6% from the year-ago period and are near the upper limit of the average range during this time of the year.
However, 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 1.07 million barrels from previous week’s level to 67.51 million barrels.
The crude supply cover was down from 29.4 days in the previous week to 28.9 days. In the year-ago period, the supply cover was 29.1 days.
Oils-Energy Sector 5YR % Return
Oils-Energy Sector 5YR % Return
Gasoline: Supplies of gasoline were up for the first time in 3 weeks on rising imports and weakening demand. The 8.31 million barrels jump – dwarfing analysts’ polled number of 1.5 million barrels increase in supply level – took gasoline stockpiles up to 235.45 million barrels. Following last week’s increase, the existing stock of the most widely used petroleum product is now 1.5% higher than the year-earlier level and is near the upper half of the average range.
Distillate: Distillate fuel supplies (including diesel and heating oil) went up by 10.05 million barrels last week, again significantly trumping analysts’ expectations for a 900,000-barrels rise. The surge in distillate fuel stocks could be attributed to higher production and lower demand. At 161.69 million barrels, distillate supplies are 1.4% higher than the year-ago level and are sitting over the upper half of the average range for this time of the year.
Refinery Rates: Refinery utilization was up by 1.0% from the prior week to 92.0%.
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 ExxonMobil Corp. (XOM - Free Report) , Chevron Corp. (CVX - Free Report) and ConocoPhillips (COP - Free Report) , and refiners such as Tesoro Corp. , Phillips 66 (PSX - Free Report) and HollyFrontier Corp. . However, each of these firms has a Zacks Rank #3 (Hold), which does not make them screaming buys.
In case you are looking for energy names for your portfolio, one could opt for Noble Midstream Partners L.P. . It has a Zacks Rank #1 (Strong Buy). Units of Noble midstream surged over 33% over the past three months, significantly outpacing the 0.5% gain for the Zacks categorized Oil and Gas - Exploration and Production – U.S. industry. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Now See Our Private Investment Ideas
While the above ideas are being shared with the public, other trades are hidden from everyone but selected members. Would you like to peek behind the curtain and view them? Starting today, for the next month, you can follow all Zacks' private buys and sells in real time from value to momentum . . . from stocks under $10 to ETF and option moves . . . from insider trades to companies that are about to report positive earnings surprises (we've called them with 80%+ accuracy). You can even look inside portfolios so exclusive that they are normally closed to new investors. Click here for Zacks' secret trades >>