Crude Oil Inventory Continues to Drop, Prices Drop Too

Total gasoline inventories decreased by 1.2 million barrels last week, and remain in the middle of the five-year average range. Total motor gasoline supplied (the EIA’s measure of consumption) averaged more than 9 million barrels a day in the past four weeks, down by about 1.3% compared with the same period a year ago.

Distillate inventories dropped by 2.4 million barrels last week, and have moved below the lower limit of the average range. Distillate product supplied averaged about 4 million barrels a day over the past four weeks, up by 0.3% when compared with the same period last year. Distillate production averaged 4.7 million barrels a day last week, down by 100,000 barrels a day compared with the prior week’s production.

Tuesday evening, the American Petroleum Institute (API) reported that crude inventories rose by 2 million barrels in the week ending August 8 together with a rise of 2.7 million barrels in gasoline supplies and a decrease of 2.6 million barrels in distillate supplies. For the same period, analysts estimated a decrease of 2 million barrels in crude inventories, a decrease of 1.5 million barrels in gasoline inventories, and a rise of 250,000 barrels in distillate inventories.

Before the EIA report, WTI crude was trading down at around $97.26 a barrel, about 0.1% below Tuesday’s closing price of $97.37. The WTI price slipped further to around $97.02 a barrel shortly after the report was released.

For the past week, crude imports averaged more than 7.8 million barrels a day, up by about 283,000 barrels a day over the previous week. Refineries were running at 91.6% of capacity, with daily input of about 16.2 million barrels a day, about 200,000 barrels a day below the previous week’s average.

U.S. motorists’ demand for gasoline has slipped and that decline resulted in a crude inventory rise last week. Refinery usage is down and so is throughput as refiners adjust to the slackening demand. Because school starts earlier and earlier (it seems) every year, vacation driving eases back earlier than in years past. The downtrend in gasoline prices could continue for the rest of this year.

According to AAA, Wednesday’s national average pump price per gallon of regular gasoline is $3.473, down from $3.483 a week ago and down from $3.617 a month ago. Last year, a gallon of regular cost $3.542 on average in the United States.

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Here’s a look at how share prices of three U.S. producers are reacting to Wednesday’s report.

Exxon Mobil Corp. (NYSE: XOM) traded up about 0.3% at $98.75 in a 52-week range of $84.79 to $104.76.

Chevron Corp. (NYSE: CVX) traded up fractionally at $127.12 in a 52-week range of $109.27 to $135.10.

Continental Resources Inc. (NYSE: CLR) traded down about 0.4% at $144.13 in a 52-week range of $90.11 to $159.24. Continental is the largest producer in the Bakken shale and reported softer than expected results Wednesday morning..

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