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Here are highlights from Friday's Analyst Blog:
EIA: Crudes Build, Fuels Drop
The U.S. Energy Department's weekly inventory release showed a build-up in crude stockpiles on the back of climbing imports. At the same time, the agency's report added that fuel inventories were off significantly from the previous week levels, while refinery run-rates increased.
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 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 (NYSE: XOM), Chevron Corp. (NYSE: CVX), ConocoPhillips (NYSE: COP), Valero (NYSE: VLO) and Tesoro (NYSE: TSO).
The federal government's EIA report revealed that crude inventories rose by 1.75 million barrels for the week ending March 11, 2011, against expectation of a larger gain set by analysts who had been surveyed by Platts. Rising imports led to the stockpile build-up with the world's biggest oil user, more than nullifying the effects of improved refinery operations.
At 350.6 million barrels, current crude supplies are 1.9% above the year-earlier level and are above the upper limit of the average for this time of the year. The crude supply cover remained unchanged from the previous week at 25.3 days. In the year-ago period, the supply cover was 24.6 days.
Importantly, crude inventories at the Cushing terminal in Oklahoma – the key delivery hub for U.S. crude futures – came off 243,000 barrels from last week's all-time high to 40.02 million barrels.
As a result of the continued glut in the domestic oil stocks and concerns that the violence in Libya will boil over to other oil rich nations in the Middle East and lead to a supply shortfall, crude prices were recently trending at over $100 a barrel. However, following apprehensions that demand from Japan – the world's third-largest oil-consuming country – could temporarily be lower due to the earthquake/tsunami disaster; prices have since backed off to around $97 a barrel level.
Supplies of gasoline fell for the fourth successive week as import levels dropped by 113 thousand barrels per day and production decreased by 282 thousand barrels per day. These were somewhat offset by a 362 thousand barrels per day decline in demand.
The 4.17 million barrel drop – almost three times that of analyst projections – took gasoline stockpiles to 225.0 million barrels, down from a 20-year high of 241.1 million barrels reached in February. Current inventory levels are down 1.0% from year-earlier levels but are in the upper half of the average range.
Distillate fuel inventories (including diesel and heating oil) were down by 2.60 million barrels last week, well ahead of analyst expectations. The decrease in distillate fuel supplies can be attributed to a fall in imports, partly offset by faltering demand. Production was up slightly, by 43 thousand barrels per day.
At 152.6 million barrels, distillate supplies were 3.0% more than the year-ago level and also above the upper boundary of the average range for this time of the year.
Refinery utilization was up 1.4% from the prior week to 83.4%. Analysts were expecting the refinery run rate to remain unchanged.
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