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Here are highlights from Thursday's Analyst Blog:
EIA: Oil Stocks Up, Gasoline Sinks
The U.S. Energy Department's weekly inventory release showed a steep build-up in crude stockpiles with supplies at the key delivery hub of Cushing hitting a record high. The agency's report further revealed that distillate stocks added to their supplies and refinery run-rates were flat for the week. However, the gasoline numbers were quite bullish with inventories dropping to their lowest level this year.
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 2.95 million barrels for the week ending March 25, 2011, against expectation of a much 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.
At 355.71 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 25.1 days in the previous week to 25.0 days. In the year-ago period, the supply cover was 25.2 days.
In particular, crude inventories at the Cushing terminal in Oklahoma – the key delivery hub for U.S. crude futures – rose 1.69 million barrels in the latest week to hit a new all-time high of 41.89 million barrels.
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 sixth successive week as firms cut down on inventories to facilitate the changeover from winter to summer-grade gasoline specifications. This was also helped by decrease in production, somewhat offset by a rise in import levels and decline in demand.
The 2.68 million barrel drop – far ahead of projections – took gasoline stockpiles to 217.04 million barrels, down from a 20-year high of 241.1 million barrels in February. Current inventory levels are 3.5% below year-earlier levels but are in the upper half of the average range.
Gasoline stockpiles have fallen by more than 24 million barrels since February 11, the biggest seasonal drawdown in 21 years.
Distillate fuel inventories (including diesel and heating oil) were up by 710,000 barrels last week, contrary to analyst expectations for a drawdown. The increase in distillate fuel supplies can be attributed to a rise in imports and faltering demand, partly offset by lower production.
At 153.33 million barrels, distillate supplies were 6.0% 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 unchanged from the prior week at 84.1%. Analysts were expecting the refinery run rate to increase 0.4% to 84.5%.
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