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Here are highlights from Monday's Analyst Blog:
EIA: Gasoline Stocks Dip Sharply
The U.S. Energy Department's weekly inventory release showed a larger-than-expected build-up in crude stockpiles, while distillates were flat for the week. However, on the bullish side, gasoline stocks dropped sharply and refinery run-rates increased from the previous week levels.
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 2.13 million barrels for the week ending March 18, 2011, against expectation of a slightly smaller gain set by analysts surveyed by Platts, an energy information firm. 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 352.8 million barrels, current crude supplies are 0.4% 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 down from 25.3 days in the previous week to 25.1 days. In the year-ago period, the supply cover was 25.1 days.
Crude inventories at the Cushing terminal in Oklahoma – the key delivery hub for U.S. crude futures – rose 177,000 barrels in the latest week to reach 40.20 million barrels, just shy of the all-time high of 40.26 million barrels hit earlier this month.
Meanwhile, as a result of the continued glut in 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 continue to march higher and are currently trending at around $105 a barrel.
Supplies of gasoline fell for the fifth successive week as firms cut down on inventories to facilitate the changeover from winter to summer-grade gasoline specifications. This was also helped by demand recovery, which improved by 244 thousand barrels per day.
These were somewhat offset by a 47 thousand barrels per day rise in import levels and a 282 thousand barrels per day increase in production.
The 5.32 million barrel drop – far ahead of projections – took gasoline stockpiles to 219.7 million barrels, down from a 20-year high of 241.1 million barrels in February. Current inventory levels are down 2.2% from year-earlier levels but are in the upper half of the average range.
Gasoline stockpiles have fallen by more than 21 million barrels since February 11, the biggest seasonal drawdown in 21 years.
Distillate fuel inventories (including diesel and heating oil) were up by a meager 7,000 barrels last week, contrary to analyst expectations for a drawdown. The increase in distillate fuel supplies can be attributed to a rise in imports, faltering demand and healthy production.
At 152.6 million barrels, distillate supplies were 4.7% 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 0.7% from the prior week to 84.1%. Analysts were expecting the refinery run rate to increase 0.3% to 83.7%.
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