EIA: Another Sharp Crude Drawdown - Analyst Blog

The U.S. Energy Department's weekly inventory release showed a larger-than-expected drop in crude stockpiles, while gasoline and distillate supplies climbed steeply. Meanwhile, refinery run-rates were up slightly 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 4.16 million barrels for the week ending December 31, 2010, well above expectations by analysts surveyed by Platts, the energy information arm of McGraw-Hill Companies Inc (MHP). The decrease in oil stocks – the fifth in as many weeks – came as imports plunged and refinery operations ramped up slightly.

Stockpiles in the world's biggest oil user have fallen by more than 24 million barrels since November 26, sending crude prices to above $90 a barrel.

However, at 335.3 million barrels, crude supplies are 2.4% 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 22.7 days in the previous week to 22.4 days. In the year-ago period, the supply cover was 23.7 days.

Gasoline

Supplies of gasoline rose for the sixth time in seven weeks, as low demand outweighed the effects of imports and production fall. The 3.29 million barrels jump – more than analyst projections – took the gasoline stockpiles to 218.1 million barrels. Current inventory levels are 0.7% 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 1.15 million barrels last week, trumping forecasts for a smaller rise. The increase in distillate fuel supplies came as demand fell 256 thousand barrels per day, more than offsetting the drop in production levels. At 162.1 million barrels, distillate supplies were 1.9% more 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 0.2% from the prior week to 88.0%. Analysts were looking for the refinery run rate to remain unchanged at 87.8%.

 
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