(CVX) U.S. Crude Oil Supply Inventories Nosedive

The U.S. Energy Department’s weekly inventory release showed that crude stockpiles fell sharply, as imports declined. The agency’s report further revealed that within the ‘refined products’ category, gasoline stocks edged up, while distillate supplies were down from the week-ago levels. Meanwhile, refiners pulled back their utilization rates by 0.6%.

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 Corp. (XOM), Chevron Corp. (CVX), ConocoPhillips (COP), Valero Energy Corp. (VLO) and Tesoro Corp. (TSO).

Analysis of the Data

Crude Oil: The federal government’s EIA report revealed that crude inventories fell by 4.27 million barrels for the week ending June 29, 2012, following a decline of 133,000 barrels the week before.

Analysts surveyed by Platts, the energy information arm of McGraw-Hill Companies Inc. (MHP), had expected oil stocks to go down some 2 million barrels. A dip in the level of imports and production led to the stockpile drawdown with the world’s biggest oil consumer even as refiners lowered their utilization rates.

However, crude inventories at the Cushing terminal in Oklahoma – the key delivery hub for U.S. crude futures traded on the New York Mercantile Exchange – increased by 225,000 barrels from previous week’s level to 47.64 million barrels. Stocks are just under the all-time high of 47.78 million barrels reached earlier in June.

At 382.90 million barrels, current crude supplies are 6.8% above the year-earlier level, and are over the upper limit of the average for this time of the year. The crude supply cover was down from 24.8 days in the previous week to 24.5 days. In the year-ago period, the supply cover was 23.6 days.

Gasoline: Supplies of gasoline increased for the third time in as many weeks despite domestic consumption edging up 1.8% to 9.0 million barrels a day. The rise in gasoline inventories could be attributed to higher production and imports.

The 151,000 barrels gain – compared to analyst projections for an unchanged supply level – took gasoline stockpiles up to 204.97 million barrels. Notwithstanding this increase, existing inventory level of the most widely used petroleum product is still 3.5% off the year-earlier levels and is below the lower limit of the average range.

Distillate: Distillate fuel supplies (including diesel and heating oil) decreased by 1.05 million barrels last week, contrary to analyst expectations for a 500,000 barrels build. The fall in distillate fuel stocks – the third decline in 4 weeks – could be attributed to stronger demand and lower imports, partially offset by higher production.

At 117.80 million barrels, distillate supplies are 17.1% below the year-ago level and are under the lower limit of the average range for this time of the year.

Refinery Rates: Refinery utilization was down 0.6% from the prior week at 92.0%.

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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