(XOM) U.S. Energy Department Weekly Inventory Release – Surprise Build in Crude Stockpiles

The U.S. Energy Department’s weekly inventory release showed a surprise build-up in crude stockpiles. The agency’s report further revealed that distillate stocks added to supplies, while gasoline inventories declined. Meanwhile, refiners reduced processing rates by 1.1%.

The Energy Information Administration (“EIA”) Petroleum Status Report – which contains data for 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 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 rose by 5.28 million barrels for the week ending August 26, 2011, after shrinking by 2.21 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 oil stocks to go down. A drop in refinery utilization and higher imports led to the stockpile build-up with the world’s biggest oil consumer. Millions of barrels of crude released from the U.S. Strategic Petroleum Reserve (“SPR”) also helped to push commercial crude stocks higher.

However, crude inventories at the Cushing terminal in Oklahoma – the key delivery hub for U.S. crude futures – came off 577,000 barrels from last week’s level to 33.09 million barrels, its lowest level since November 2010. Stocks reached an all-time high of 41.90 million barrels earlier this year.

At 357.05 million barrels, current crude supplies are 1.3% lower than the year-earlier level but are above the upper limit of the average for this time of the year. The crude supply cover was up from 22.6 days in the previous week to 23.0 days. In the year-ago period, the supply cover was 24.1 days.

Gasoline

Supplies of gasoline decreased for the third time in four weeks on the back of lower import levels and stronger demand, more than offsetting the impact of improved production. The 2.80-million-barrel decline against projections for a much smaller draw took gasoline stockpiles down to 208.64 million barrels. The existing inventory level is 7.5% below the year-earlier levels but is in the upper half of the average range.

Distillate

Distillate fuel inventories (including diesel and heating oil) were up by 363,000 barrels last week, compared with analyst expectations for a larger build. The increase in distillate fuel supplies can be attributed to higher production and imports, somewhat offset by stronger demand. At 156.06 million barrels, distillate supplies are 10.9% 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 89.2%. Analysts were expecting the refinery run rate to decrease 0.5% to 89.8%.

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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