The U.S. Energy Department’s weekly inventory release showed that crude stockpiles fell the most in six months, while gasoline and distillate both added to their supplies. Meanwhile, refiners enhanced processing rates by 1.2%.
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 shrank by 4.85 million barrels for the week ending June 3, 2011, the largest weekly drop since December 2010. Analysts who had been surveyed by Platts, the energy information arm of McGraw-Hill Companies Inc. (MHP), had expected a much smaller decline. A large drop in imports and improved refinery operations led to the dip in stockpile with the world’s biggest oil user.
In particular, crude inventories at the Cushing terminal in Oklahoma – the key delivery hub for U.S. crude futures – came off 1.02 million barrels from last week’s level to 38.90 million barrels. It reached an all-time high of 41.90 million barrels earlier this year.
At 368.96 million barrels, current crude supplies are 2.1% 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 25.7 days in the previous week to 25.0 days. In the year-ago period, the supply cover was 23.9 days.
Gasoline
Supplies of gasoline increased for the fifth successive week on the back of weaker demand and higher production, more than offsetting the lower import levels. The 2.21 million barrel-build – much higher than projections – took gasoline stockpiles up to 214.49 million barrels. The existing inventory level is 2.1% below the year-earlier levels and is in the upper 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 up by 810,000 barrels last week, as against analyst expectations for a lower build. The increase in distillate fuel supplies can be attributed to higher production and imports, as well as tepid demand.
At 140.93 million barrels, distillate supplies are 9.0% 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 up 1.2% from the prior week to 87.2%. Analysts were expecting the refinery run rate to increase 0.7% to 86.7%.
