Crude Oil Piles Up Huge Inventory Build

The U.S. Energy Information Administration (EIA) released its weekly petroleum status report this morning. U.S. commercial crude inventories rose by 8.5 million barrels last week, bringing the total U.S. commercial crude inventory to 367.6 million barrels, above the upper limit of the five-year range for this time of the year.

The Dow-Jones estimate called for a weekly crude inventory rise of 500,000 barrels. Crude prices, which were already trading lower today, have continued falling slightly following the EIA report. The higher crude inventory build and the larger-than-expected drop in gasoline inventories did not cancel one another out. The huge build in crude inventory is simply too large to overcome.

Total gasoline inventories decreased by 1.4 million barrels last week and remain in the lower half of the five-year average range. Total motor gasoline supplied averaged 8.9 million barrels a day over the past four weeks — a drop of 0.9% compared with the same period a year ago.

For the past week, crude imports averaged 9.8 million barrels a day, an increase of 1.3 million barrels a day from the previous week. Refineries were running at 88.9% of capacity, with daily input of 14.9 million barrels a day, 14,595 barrels a day from the previous week.

Distillate inventories, which include diesel fuel, fell by 300,000 barrels last week and are near the lower limit of the average range. Distillate product supplied averaged 3.4 million barrels a day last week, down 11.2% when compared with the same period last year. Distillate production totaled 4.6 million barrels a day last week.

The effects of Hurricane Isaac, which had closed essentially all crude production and refinery operations in the Gulf of Mexico, have essentially disappeared. Refinery utilization rose from around 85% in the week ending September 7 to nearly 89% last week.

The United States Oil ETF (NYSEMKT: USO) is down 2.9% at $34.55 in a 52-week range of $29.02 to $42.30.

The United States Gasoline ETF (NYSEMKT: UGA) is down 2% at $57.22. The 52-week range is $44.65 to $61.95. UGA posted that 52-week high just last week.

Paul Ausick