U.S. Crude Supplies Plunge - Analyst Blog

The U.S. Energy Department's weekly inventory release showed a large drop in crude stockpiles – the biggest weekly decline in eight years – while gasoline supplies posted a smaller-than-expected build. The agency's report further added that distillate stocks climbed unexpectedly and refinery run-rates were virtually unchanged from the previous week.

The Energy Information Administration (“EIA”) Petroleum Status Report – that 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 to 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 oil and refining industry like ExxonMobil (XOM), Chevron Corp. (CVX), ConocoPhillips (COP), Valero (VLO) and Tesoro (TSO).

Crude Oil

The federal government's EIA reported that crude inventories fell by 9,854 thousand barrels for the week ending December 10, 2010, well above analysts' expectations. The decrease in oil stocks – the second in as many weeks – came as imports plunged and refinery operations almost held steady.

However, at 346.0 million barrels, crude supplies are 4.1% above the year-earlier level and remain above the upper limit of the average for this time of the year. The crude supply cover was down from 24.7 days in the previous week to 23.8 days. In the year-ago period, the supply cover was 23.9 days.

Gasoline

Supplies of gasoline rose for the fourth consecutive week, though the increase was less than projected. The 809 thousand barrels jump came on the back of surging imports, which more than offset the fall in production. At 214.8 million barrels, current stockpiles are 1.1% below  year-earlier levels and are on the upper half of the average range.

Distillate

Distillate fuel inventories (including diesel and heating oil) were up by 1,094 thousand barrels last week, against forecasts for a drawdown. The increase in distillate fuel supplies came as production levels rose 53 thousand barrels per day, while imports climbed by 7 thousand barrels per day. At 161.3 million barrels, distillate supplies were 1.9% less than the year-ago level but just above the upper boundary of the average range for this time of the year.

Refinery Rates

Refinery utilization was up 0.5% from the prior week to 88.0%, the highest since September. Analysts were looking for the refinery run rate to decrease to 86.5%.

 
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