The Zacks Analyst Blog Highlights: Exxon Mobil, Chevron, Devon Energy, Valero Energy and Phillips 66

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Dec 22, 2014, 09:30 ET

CHICAGO, Dec. 22, 2014 /PRNewswire/ -- Zacks.com announces the list of stocks featured in the Analyst Blog. Every day the Zacks Equity Research analysts discuss the latest news and events impacting stocks and the financial markets. Stocks recently featured in the blog include the Exxon Mobil Corp. (NYSE:XOM-Free Report), Chevron Corp. (NYSE:CVX-Free Report), Devon Energy Corp. (NYSE:DVN-Free Report), Valero Energy Corp. (NYSE:VLO-Free Report) and Phillips 66 (NYSE:PSX-Free Report).

Today, Zacks is promoting its ''Buy'' stock recommendations. Get #1Stock of the Day pick for free.

Here are highlights from Friday's Analyst Blog:

Oil Supplies Fall on Import Drop, Production Hits Record High

The U.S. Energy Department's weekly inventory release showed that crude stockpiles recorded a smaller-than-expected decline despite domestic production notching up a new record. The report further revealed that within the 'refined products' category, gasoline stocks rose, while distillate supplies were down from the week-ago level.

Analysis of the Data

Crude Oil: The federal government's EIA report revealed that crude inventories fell by 847,000 barrels for the week ending Dec 12, 2014, following a climb of 1.45 million barrels in the previous week.

The analysts surveyed by Platts – the energy information arm of McGraw-Hill Financial Inc. – had expected crude stocks to go down some 2.5 million barrels. A sharp pullback in imports led to the modest stockpile drawdown with the world's biggest oil consumer even as refinery utilization rates tightened and domestic production continued to spike – now at their all-time highest level.

However, crude inventories at the Cushing terminal in Oklahoma – the key delivery hub for U.S. crude futures traded on the New York Mercantile Exchange – were up 2.92 million barrels from the previous week's level to 27.83 million barrels. Nevertheless, stocks are currently 46% under the all-time high of 51.86 million barrels reached in Jan 2013.

Despite the second inventory decrease in 3 weeks, at 379.94 million barrels, current crude supplies are up 2% from the year-ago period and is above the upper limit of the average for this time of the year. The crude supply cover was down from 23.5 days in the previous week to 23.3 days. In the year-ago period, the supply cover was 23.4 days.

Gasoline: Supplies of gasoline were up for the sixth successive week, as production and imports jumped. This was partially offset by strength in domestic consumption.

The 5.25 million barrels gain – compared to analysts' projections for a 2.3 million barrels increase in supply level – took gasoline stockpiles up to 222.01 million barrels. Following this massive build, the existing inventory level of the most widely used petroleum product is marginally higher than the year-earlier level and is well over the upper limit of the average range.

Distillate: Distillate fuel supplies (including diesel and heating oil) were down 207,000 barrels last week, counter to analysts' expectations for a 670,000 barrels rise in inventory level. The decrease in distillate fuel stocks – the first time in 3 weeks – could be attributed to strong demand and lower imports. At 121.54 million barrels, distillate supplies are 4.7% above the year-ago level and are close to the lower limit of the average range for this time of the year.

Refinery Rates: Refinery utilization was down 2% from the prior week to 93.5%.

About the Weekly Petroleum Status Report

The Energy Information Administration (EIA) Petroleum Status Report, containing data of the previous week ending 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 the businesses of the companies engaged in the oil and refining industry.

The data from EIA generally acts as a catalyst for crude prices and affect producers, such as Exxon Mobil Corp. (NYSE:XOM-Free Report), Chevron Corp. (NYSE:CVX-Free Report) and Devon Energy Corp. (NYSE:DVN-Free Report), and refiners, such as Valero Energy Corp. (NYSE:VLO-Free Report) and Phillips 66 (NYSE:PSX-Free Report). With an improvement/deterioration in the companies' ability to generate positive earnings surprises, they can then move higher/lower from their current Zacks Rank.

As of now, all the above-mentioned companies retain a Zacks Rank #3 (Hold), implying that they are expected to perform in line with the broader U.S. equity market over the next one to three months.

Today, Zacks is promoting its ''Buy'' stock recommendations. Get #1Stock of the Day pick for free.

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