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Big Jump in U.S. Crude Stocks

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The U.S. Energy Department's weekly inventory release showed that crude stockpiles jumped to their highest level since the week ending August 3, 2012 and refiners pushed up their utilization rates by 4.2%, as the Hurricane Isaac-affected units in the Gulf of Mexico were back to their regular operations. The report further revealed that refined product inventories – gasoline and distillate – dropped from their week-ago levels.

The Energy Information Administration (EIA) Petroleum Status Report, which contains data for 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 businesses of companies engaged in the oil and refining industry, such as ExxonMobil Corp. (XOM - Free Report) , Chevron Corp. (CVX - Free Report) , ConocoPhillips (COP - Free Report) , Valero Energy Corp. (VLO - Free Report) and Tesoro Corp. .

Analysis of the Data

Crude Oil: The federal government’s EIA report revealed that crude inventories jumped by 8.53 million barrels for the week ending September 14, 2012, following a climb of 1.99 million barrels in the previous week.

The analysts surveyed by Platts – the energy information arm of McGraw-Hill Companies Inc. , had expected oil stocks to go up some 2.5 million barrels. A sharp rise in the level of imports and production – as normalcy returned in the Gulf of Mexico facilities following Hurricane Isaac-related shutdowns – led to the massive stockpile build-up with the world's biggest oil consumer.

However, crude inventories at the Cushing terminal in Oklahoma – the key delivery hub for U.S. crude futures traded on the New York Mercantile Exchange – edged down by 274,000 barrels from the previous week’s level to 43.81 million barrels. Stocks are currently just under the all-time high of 47.78 million barrels reached in June.

At 367.63 million barrels, current crude supplies are 8.4% above the year-earlier level, and exceeds the upper limit of the average for this time of the year. The crude supply cover was up from 24.0 days in the previous week to 24.8 days. In the year-ago period, the supply cover was 22.2 days.

Gasoline: Supplies of gasoline decreased for the eighth time in as many weeks despite domestic consumption declining marginally. The fall in gasoline inventories could be attributed to plummeting imports.

The 1.41 million barrels drop – contrary to analyst projections for a 1 million barrel increase in supply level – took gasoline stockpiles down to 196.31 million barrels. As a result of this decrease, the existing inventory level of the most widely used petroleum product is now 8.3% off the year-earlier levels and is in the lower limit of the average range.

Distillate: Distillate fuel supplies (including diesel and heating oil) inched down by 322,000 barrels last week, as against analyst expectations for a 1 million barrel increase in inventory level. The fall in distillate fuel stocks – the first in six weeks – could be attributed to stronger demand, partially offset by higher imports and output.

At 128.23 million barrels, distillate supplies are 18.7% below the year-ago level and are near the lower limit of the average range for this time of the year.

Refinery Rates: Refinery utilization improved 4.2% from the prior week to 88.9%, as the facilities resumed normal operations following the aftereffects of Hurricane Isaac.

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