(EIA) U.S. Energy Department Weekly Report Shows Crude and Distillate Stocks Drop

The U.S. Energy Department’s weekly inventory release showed that crude and distillate stockpiles moved downwards, while gasoline supplies rose for the sixth straight week. Meanwhile, refiners reduced processing rates by 1.1%.

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 the 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 shrank by 3.41 million barrels for the week ending June 10, 2011, after falling by 4.85 million barrels in the preceding week. Analysts who had been surveyed by Platts, the energy information arm of McGraw-Hill Companies Inc. (MHP), had expected a much smaller decline.

A large drawdown in the Midwest on the back of lower imports from Canada led to the dip in stockpile with the world’s biggest oil user. This was aided by a healthy rise in the Midwest’s refinery operations that further helped absorb stockpiles there.

In particular, crude inventories at the Cushing terminal in Oklahoma – the key delivery hub for U.S. crude futures – came off 1.14 million barrels from last week’s level to 37.76 million barrels. It reached an all-time high of 41.90 million barrels earlier this year.

At 365.56 million barrels, current crude supplies are 0.7% higher than 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 25.0 days in the previous week to 24.5 days. In the year-ago period, the supply cover was 24.0 days.

Gasoline

Supplies of gasoline increased for the sixth successive week on the back of higher production, more than offsetting the lower import levels and stronger demand. The 573,000 barrels-build – much lower than projections – took gasoline stockpiles up to 215.07 million barrels. The existing inventory level is 1.5% below the year-earlier levels and is in the upper half of the average range.

The current build-up in gasoline stockpiles follows an eleven-week trend (from February 11 to April 29) of continuous decline during which supplies fell by more than 36 million barrels.

Distillate

Distillate fuel inventories (including diesel and heating oil) were down by 105,000 barrels last week, as against analyst expectations for a build. The decrease in distillate fuel supplies can be attributed to lower production and imports, partially offset by tepid demand.

At 140.82 million barrels, distillate supplies are 10.1% less than the year-ago level but are in the upper boundary of the average range at this time of the year.

Refinery Rates

Refinery utilization was down 1.1% from the prior week to 86.1%. Analysts were expecting the refinery run rate to edge up 0.3% to 87.5%.

CONOCOPHILLIPS (COP): Free Stock Analysis Report

CHEVRON CORP (CVX): Free Stock Analysis Report

MCGRAW-HILL COS (MHP): Free Stock Analysis Report

TESORO CORP (TSO): Free Stock Analysis Report

VALERO ENERGY (VLO): Free Stock Analysis Report

EXXON MOBIL CRP (XOM): Free Stock Analysis Report

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