Big Oil Inventory Build Shakes Up Oil & Gas Sector (USO, UGA, PSX, VLO, OIH)

The Department of Energy is out with its weekly oil and gasoline inventory data and this is going to likely move the markets.  Crude oil stocks managed to build up by a whopping 2.86 million barrels in the last week to 387.3 million barrels.  Dow Jones had a consensus calling for a drop of 1 million barrels, so this is a sharp move.  United States Oil (AMEX: USO) dropped handily on this report and the exchange-traded product is down 1.4% at $31.23 on the news.

Even gasoline inventories rose by 943,000 barrels to 202.744 million barrels. Dow Jones was expecting gasoline inventories to rise by only 400,000 barrels. United States Gasoline (AMEX: UGA) is now hitting morning lows with a 0.9% drop to $47.04.

The refining capacity remained very high at 91.9% versus 92% a week ago and versus an expectation of 92% capacity expected by Dow Jones. This continues to show some positive for refining as long as those inventories do not keep climbing too much.  We are seeing a mixed bag on two of the refining leaders: Phillips 66 (NYSE: PSX) is up 0.4% at $33.99 and Valero Energy Corporation (NYSE: VLO) is up 0.9% at $23.24.

The oil and gas services companies have seen shares pop then drop so far this morning considering this report.  The Market Vectors Oil Services ETF (AMEX: OIH) is up only $0.04 at $36.26 this morning.

JON C. OGG