Inventory Builds Signal Lower Gasoline Prices

The U.S. Energy Information Administration (EIA) released its weekly petroleum status report this morning. U.S. commercial crude inventories increased by 5.9 million barrels last week, bringing the total U.S. commercial crude inventory to 375.1 million barrels, above the upper limit of the five-year range for this time of the year.

Total gasoline inventories rose by 1.4 million barrels last week and remain in the lower half of the five-year average range. Total motor gasoline supplied averaged nearly 8.6 million barrels a day over the past four weeks — a drop of 1.8% compared with the same period a year ago.

According to analysts surveyed by Dow Jones, crude supplies were expected to rise by 1.8 million barrels, while gasoline supplies were expected to rise by 600,000 barrels and distillate supplies were expected to fall by 800,000 barrels.

Crude prices, which had fallen to about $86.20 a barrel before the report was released, have fallen below $86.00 a barrel following the EIA report and are down about 0.8% on the day so far.

For the past week, crude imports averaged more than 8.8 million barrels a day, an increase of about 476,000 barrels a day from the previous week. Refineries were running at 87.2% of capacity, with daily input of 14.8 million barrels a day, about 17,000 barrels a day less than the previous week.

Distillate inventories fell by 600,000 barrels last week and are below the lower limit of the average range. Distillate product supplied averaged more than 3.8 million barrels a day over the past four weeks, down 7.7% when compared with the same period last year. Distillate production totaled nearly 4.4 million barrels a day last week, down by about 100,000 barrels a day from the prior week.

Refinery utilization remained flat last week, and distillate inventory draw-downs and lower distillate production could push heating oil prices higher, although that does not appear to be happening yet today.

The United States Oil ETF (NYSEMKT: USO) is down about 1.3% at $31.64 in a 52-week range of $29.02 to $42.30.

The United States Gasoline ETF (NYSEMKT: UGA) is down about 0.4% at $54.12. The 52-week range is $44.98 to $62.13.

Paul Ausick