(MHP) U.S. Domestic Crude Supplies Rise Again

The U.S. Energy Department’s weekly inventory release showed that crude stockpiles logged an increase, as imports climbed. The report further revealed that within the ‘refined products’ category, gasoline stocks fell, while distillate supplies were up from the week-ago levels. Meanwhile, refiners scaled up their utilization rates by 2.2%.

The Energy Information Administration (EIA) Petroleum Status Report, containing data of 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 the businesses of the companies engaged in the oil and refining industry.

Analysis of the Data

Crude Oil: The federal government’s EIA report revealed that crude inventories rose by 1.13 million barrels for the week ending Feb 22, 2013, following a climb of 4.14 million barrels in the previous week.

The analysts surveyed by Platts – the energy information arm of McGraw-Hill Companies Inc. (MHP), had expected oil stocks to go up some 2.6 million barrels. An uptick in the level of imports led to the sixth straight weekly stockpile build-up with the world’s biggest oil consumer even as domestic production declined and demand improved.

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 – was down 75,000 barrels from the previous week’s level to 50.58 million barrels. Stocks are currently just under the all-time high of 51.86 million barrels reached in January.

At 377.52 million barrels, current crude supplies are 9.4% above the year-earlier level, and comfortably exceed the upper limit of the average for this time of the year. The crude supply cover inched up from 26.2 days in the previous week to 26.3 days. In the year-ago period, the supply cover was 23.5 days.

Gasoline: Supplies of gasoline were down for the third time in as many weeks, as domestic consumption strengthened. This was partially offset by higher production and imports.

The 1.86 million barrels withdrawal – ahead of the analysts’ projections for a 1.5 million barrels decrease in supply level – took gasoline stockpiles down to 228.49 million barrels. Following this drawdown, the existing inventory level of the most widely used petroleum product is 0.6% lower than the year-earlier level despite being in the upper half of the average range.

Distillate: Distillate fuel supplies (including diesel and heating oil) were up 557,000 barrels last week, contrary to analysts’ expectations for a 1.7 million barrels drop in inventory level. The increase in distillate fuel stocks – the first in 5 weeks – could be attributed to weaker demand and higher production, partially offset by lower imports.

At 124.18 million barrels, distillate supplies are 12.2% below the year-ago level and are in the lower limit of the average range for this time of the year.

Refinery Rates: Refinery utilization increased 2.2% from the prior week to 85.1%.

Zacks Rank

A bullish data from the EIA generally acts as a positive catalyst for crude prices and buoy producers, such as Exxon Mobil Corp. (XOM), Chevron Corp. (CVX) and ConocoPhillips (COP). With an improvement in the companies’ ability to generate positive earnings surprises, they can then move higher from their current Zacks Rank #3 (Hold).

CONOCOPHILLIPS (COP): Free Stock Analysis Report

CHEVRON CORP (CVX): Free Stock Analysis Report

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

EXXON MOBIL CRP (XOM): Free Stock Analysis Report

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