EIA Data Lifts Oil To 27-Month High - 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 down from the previous week.

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 fell by 2.15 million barrels for the week ending January 7, 2011,  well above the expectations set by analysts who had been surveyed by Platts, the energy information arm of McGraw-Hill Companies Inc (MHP). The decrease in oil stocks – the sixth in as many weeks – came even as imports increased and refineries operated at lower capacity. It can be attributed to cold weather conditions prevailing in the U.S. Northeast market and the year-end tax-related inventory adjustments in the Gulf Coast.

Stockpiles in the world's biggest oil user – now at their lowest level in 11 months – have fallen by more than 26.5 million barrels since November 26, sending crude prices to almost $92 per barrel, a 27-month peak.

However, at 333.1 million barrels, crude supplies are just above (by 0.6%) the year-earlier level and remain above the upper limit of the average for this time of the year. The crude supply cover remained unchanged from the previous week at 22.4 days. In the year-ago period, the supply cover was 23.9 days.

Gasoline

Supplies of gasoline rose for the seventh time in seven weeks, as imports spiked by 358 thousand barrels per day. The 5.08 million barrel jump – more than analyst projections – took the gasoline stockpiles to 223.2 million barrels. Current inventory levels are almost in-line with year-earlier levels and has just crossed the upper half of the average range.

Distillate

Distillate fuel inventories (including diesel and heating oil) were up by 2.65 million barrels last week, trumping forecasts for a smaller rise. The increase in distillate fuel supplies can again be attributed to soaring imports (up by 212 thousand barrels per day week-over-week) that more than offset the drop in production levels. At 164.8 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 1.6% from the prior week to 86.4%. Analysts were looking for the refinery run rate to remain unchanged at 88.0%.

 
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