The U.S. Energy Department’s weekly inventory release showed a continued build-up in crude stockpiles with supplies at the key delivery hub of Cushing hitting a record high. However, on the bullish side, the agency’s report revealed that gasoline stocks dropped sharply, while distillate supplies were also down from the previous week. Additionally, refiners cut processing rates by 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 rose by 1.63 million barrels for the week ending April 08, 2011, in line with projection set by analysts surveyed by Platts, the energy information arm of McGraw-Hill Companies Inc. (MHP). A large drop in refinery utilization led to the stockpile build-up with the world’s biggest oil user, even as imports fell.
At 359.29 million barrels, current crude supplies are 1.5% 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 up from 25.0 days in the previous week to 25.2 days. In the year-ago period, the supply cover was 24.5 days.
In particular, crude inventories at the Cushing terminal in Oklahoma – the key delivery hub for U.S. crude futures – rose 26,000 barrels in the latest week to hit a new all-time high of 41.90 million barrels.
But despite the continued glut in domestic oil stocks, crude prices continue to march higher and are currently trending at around $107 a barrel. This can be mainly attributable to concerns that the unrest in Libya will boil over to other oil rich nations in the Middle East and lead to a supply shortfall.
Gasoline
Supplies of gasoline fell for the eighth successive week as firms cut down on inventories to facilitate the changeover from winter to summer-grade gasoline specifications. The steep gasoline drawdown was also helped by a rebound in demand – jumping to a 5-week high – and a big drop in refinery runs due to maintenance.
The large 7.0 million-barrel drop – way ahead of projections – took gasoline stockpiles to 209.68 million barrels, down from a 20-year high of 241.1 million barrels in February. Current inventory levels are 5.2% below the year-earlier levels and are near the lower half of the average range.
Gasoline stockpiles have fallen by more than 31 million barrels since February 11, when they reached their highest in almost 21 years.
Distillate
Distillate fuel inventories (including diesel and heating oil) were down by 2.68 million barrels last week, compared with analyst expectations for an unchanged stock. The decrease in distillate fuel supplies can be attributed to a production cut by the refiners and lower imports.
At 150.84 million barrels, distillate supplies were 2.7% more than the year-ago level and also above the upper boundary of the average range for this time of the year.
Refinery Rates
Refinery utilization was down 3% from the prior week to 81.4%. Analysts were expecting the refinery run rate to increase 0.4% to 84.8%.
CONOCOPHILLIPS (COP): Free Stock Analysis Report
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