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Surprise Draw in U.S. Crude Stocks

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The U.S. Energy Department's weekly inventory release showed that crude stockpiles logged an unexpected decline, as refiners scaled up their utilization rates. The report further revealed that within the ‘refined products’ category, gasoline stocks rose, while distillate supplies were down from the 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 the 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 fell by 347,000 barrels for the week ending November 23, 2012, following a drop of 1.47 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 500,000 barrels. An uptick in refinery utilization rates led to the surprise stockpile drawdown with the world's biggest oil consumer even as imports rose.

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 up by 707,000 barrels from the previous week’s level to 45.86 million barrels. Stocks are currently just under the all-time high of 47.78 million barrels reached in June.

At 374.12 million barrels, current crude supplies are 11.8% above the year-earlier level, and comfortably exceed the upper limit of the average for this time of the year. The crude supply cover was down from 25.4 days in the previous week to 25.2 days. In the year-ago period, the supply cover was 22.9 days.

Gasoline: Supplies of gasoline were up for the first time in 3 weeks, as domestic consumption tumbled. This was partially offset by falling imports and production.

The 3.87 million barrels gain – compared to analyst projections for a 1 million barrels increase in supply level – took gasoline stockpiles up to 204.26 million barrels. However, notwithstanding this build, the existing inventory level of the most widely used petroleum product is still 2.6% off the year-earlier levels and is in the lower half of the average range.

Distillate: Distillate fuel supplies (including diesel and heating oil) dropped by 800,000 barrels last week, much higher than analysts' expectations for a 150,000 barrels decrease in inventory level. The sharp decline in distillate fuel stocks – the tenth in 11 weeks – could be attributed to lower production, partially offset by weaker demand and higher imports.

At 112.04 million barrels, distillate supplies are 19.1% below the year-ago level and are well under the lower limit of the average range for this time of the year.

Refinery Rates: Refinery utilization was up 1.1% from the prior week to 88.6%.

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