(XOM) U.S. Crude Oil Inventory Stocks Dip – Products Build

The U.S. Energy Department’s weekly inventory release showed that crude stockpiles fell more than twice that of analyst expectations to reach their lowest level since February, as Tropical Storm Lee reduced production. However, the overall nature of the data is bearish with gasoline and distillate both adding to their supplies. Meanwhile, refiners reduced processing rates by 2.0%.

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 shrank by 6.70 million barrels for the week ending September 9, 2011, the largest weekly drop this year.

Analysts surveyed by Platts, the energy information arm of McGraw-Hill Companies Inc. (MHP), had expected oil stocks to go down some 2.9 million barrels. Production shutdown caused by the Tropical Storm Lee led to the dip in stockpile with the world’s biggest oil consumer even as refiners cut their utilization rates.

In particular, crude inventories at the Cushing terminal in Oklahoma – the key delivery hub for U.S. crude futures – came off 460,000 barrels from last week’s level to 32.23 million barrels, its lowest level since November 2010. Stocks reached an all-time high of 41.90 million barrels earlier this year.

At 346.38 million barrels, current crude supplies are 3.1% 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 down from 22.8 days in the previous week to 22.5 days. In the year-ago period, the supply cover was 24.0 days.

Gasoline

Supplies of gasoline increased for the third time in four weeks on the back of weaker demand, higher import levels, and improved production. The 1.94 million barrels-build – against projections for a drawdown – took gasoline stockpiles up to 210.78 million barrels. The existing inventory level is 6.1% below the year-earlier levels, but is above the upper half of the average range.

Distillate

Distillate fuel inventories (including diesel and heating oil) were up by 1.71 million barrels last week, compared with analyst expectations for a smaller build. The increase in distillate fuel supplies can be attributed to tepid demand, somewhat offset by lower production. At 158.48 million barrels, distillate supplies are 9.2% lower 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 2.0% from the prior week to 87.0%. Analysts were expecting the refinery run rate to decrease 0.7% to 88.3%.

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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