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U.S. Crude Stocks Build, Fuels Drop

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The U.S. Energy Department's weekly inventory release showed that crude stockpiles increased, as imports climbed and refinery demand weakened. 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, 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 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 rose by 1.67 million barrels for the week ending October 5, 2012, following a slide of 482,000 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 1.5 million barrels. An uptick in the level of imports and drop in refinery utilization rates led to the stockpile build-up with the world's biggest oil consumer.

In particular, 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 up by 300,000 barrels from the previous week’s level to 44.17 million barrels. Stocks are currently just under the all-time high of 47.78 million barrels reached in June.

At 366.37 million barrels, current crude supplies are 8.5% above the year-earlier level, and exceeds the upper limit of the average for this time of the year. The crude supply cover was unchanged from the previous week at 24.8 days. In the year-ago period, the supply cover was 22.5 days.

Gasoline: Supplies of gasoline decreased for the tenth time in 11 weeks despite domestic consumption declining marginally. The fall in gasoline inventories could be attributed to plummeting imports and production.

The 534,000 barrels drop – compared to analyst projections for an unchanged supply level – took gasoline stockpiles down to 195.41 million barrels. As a result of this drawdown, the existing inventory level of the most widely used petroleum product is now 6.8% off the year-earlier levels and is near the lower limit of the average range.

Distillate: Distillate fuel supplies (including diesel and heating oil) dropped by 3.18 million barrels last week, much higher than analyst expectations for a 400,000 barrels decrease in inventory level. The fall in distillate fuel stocks – the fourth in as many weeks – could be attributed to lower production, partially offset by higher imports and weaker demand.

At 120.88 million barrels, distillate supplies are 21.5% below the year-ago level and are under the lower limit of the average range for this time of the year.

Refinery Rates: Refinery utilization was down 1.5% from the prior week to 86.7%.

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