The U.S. Energy Department’s weekly inventory release showed an unexpected increase in crude stockpiles – currently at their highest level in two years, while gasoline supplies rose for the fourth straight week. However, the distillate numbers were quite bullish with inventories dropping more than expected. Meanwhile, refiners reduced processing rates by 0.3%.
The Energy Information Administration (EIA) Petroleum Status Report – which contains data for the previous week ending on 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 (XOM), Chevron Corp. (CVX), ConocoPhillips (COP), Valero (VLO) and Tesoro (TSO).
Crude Oil
The federal government’s EIA report revealed that crude inventories jumped by 2.88 million barrels for the week ending May 27, 2011, contrary to expectations of a drawdown set by analysts who had been surveyed by Platts, the energy information arm of McGraw-Hill Companies Inc. (MHP). A surge in imports led to the stockpile build-up with the world’s biggest oil user.
However, crude inventories at the Cushing terminal in Oklahoma – the key delivery hub for U.S. crude futures – came off 159,000 barrels from last week’s level to 39.92 million barrels. It reached an all-time high of 41.90 million barrels earlier this year.
At 373.81 million barrels, the maximum since May 1, 2009, current crude supplies are 2.9% higher than the year-earlier level and are above the upper limit of the average for this time of the year. The crude supply cover was down from 25.9 days in the previous week to 25.7 days. In the year-ago period, the supply cover was 24.0 days.
Gasoline
Supplies of gasoline increased for the fourth successive week on the back of a healthy rise in production levels, despite a rebound in demand and lower import levels. The 2.55 million barrel-build – much higher than projections – took gasoline stockpiles up to 212.28 million barrels. The existing inventory level is 3.1% below the year-earlier levels and is in the lower half of the average range.
The current build-up in gasoline stockpiles follows an eleven-week trend (from February 11 to April 29) of continuous decline during which supplies fell by more than 36 million barrels.
Distillate
Distillate fuel inventories (including diesel and heating oil) were down by 976,000 barrels last week, as against analyst expectations for a lower decline. The decrease in distillate fuel supplies – concentrated in the ultra-low sulfur diesel (ULSD) category – can be attributed to lower production, partially offset by higher imports and tepid demand.
At 140.12 million barrels, distillate supplies were 8.4% less than the year-ago level but are in the upper boundary of the average range for this time of the year.
Refinery Rates
Refinery utilization was down 0.3% from the prior week to 86.0%, reversing forecasts for a 0.6% increase.
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