EIA: Crude Supplies Jump Further - Analyst Blog

The U.S. Energy Department's weekly inventory release showed a steep build in crude and gasoline stockpiles, while refinery run-rates decreased from the previous week. The agency's report further added that distillate supplies logged a smaller-than-expected decline.

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 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, 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 4.84 million barrels for the week ending January 21, 2011, against expectation of a smaller gain set by analysts who had been surveyed by Platts, the energy information arm of McGraw-Hill Companies Inc. (MHP).

The increase in oil stocks – the second in as many weeks – follows a 6-week trend of steady decline in supplies, which slid by more than 26.5 million barrels during the period, fueled by cold weather conditions and the year-end tax-related inventory adjustments. Rising imports and curtailed refinery operations led to the stockpile build in the world's biggest oil user.

At 340.6 million barrels, crude supplies are 4.3% above 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 22.8 days in the previous week to 23.4 days. In the year-ago period, the supply cover was 23.7 days.

Gasoline

Supplies of gasoline rose for the fourth straight week, as demand fell by 143 thousand barrels per day, more than offsetting the drop in imports and production. The 2.40 million barrel jump – more than analyst projections – took gasoline stockpiles to 230.1 million barrels. Current inventory levels are almost in line with year-earlier levels and are above the upper half of the average range.

Distillate

Distillate fuel inventories (including diesel and heating oil) were down by 140 thousand barrels last week, failing to match forecasts for a higher fall. The decrease in distillate fuel supplies can be attributed to a drop in heating oil, in line with seasonal tendencies.

At 165.7 million barrels, distillate supplies were 5.2% 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 1.2% from the prior week to 81.8%. Analysts were looking for the refinery run rate to decrease slightly less to 82.45%.

 
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