Crude Oil Inventory Falls, but Prices Remain Driven by Lack of Demand

Total gasoline inventories decreased by 400,000 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 8.9 million barrels a day for the past four weeks, unchanged from the same period a year ago.

Distillate inventories increased by 800,000 barrels last week, but they remain near the lower limit of the average range. Distillate product supplied averaged over 3.7 million barrels a day over the past four weeks, down by 0.2% when compared with the same period last year. Distillate production averaged 4.9 million barrels a day last week, down about 1 million barrels a day from the prior week’s production.

Tuesday evening, the American Petroleum Institute (API) reported that crude inventories dropped by 6.5 million barrels in the week ending September 19, together with a rise of 91,000 barrels in gasoline supplies and an increase of 3 million barrels in distillate supplies. For the same period, analysts surveyed by Platts estimated an increase of a million barrels in crude inventories, a decrease of 600,000 barrels in gasoline inventories and an increase of 160,000 barrels in distillate inventories.

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Before the EIA report, West Texas Intermediate (WTI) crude was trading down at around $91.40 a barrel, about 0.2% below Tuesday’s closing price of $91.56. The WTI price rose slightly to around $91.50 shortly after the report was released.

For the past week, crude imports averaged more than 6.9 million barrels a day, down by 1.2 million barrels a day in the previous week. Refineries were running at 93.4% of capacity, with daily input of more than 16.2 million barrels a day, about 90,000 barrels a day below the previous week’s average.

WTI crude prices have slipped from a high of around $93.70 a barrel a week ago to less than $92 a barrel. The current inventory decrease reflects an effort by producers to try to raise their prices somewhat. Pump prices for consumers continue to slide as demand falters.

According to AAA, the current national average pump price per gallon of regular gasoline is $3.344, down from $3.373 a week ago and from $3.437 a month ago. Last year a gallon of regular cost $3.461 on average in the United States.

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Here is a look at how share prices at three U.S. producers reacted to this latest report.

Exxon Mobil Corp. (NYSE: XOM) traded down about 1.0%, at $95.09 in a 52-week range of $84.79 to $104.76.

Chevron Corp. (NYSE: CVX) traded down about 1.5%, at $121.26 in a 52-week range of $109.27 to $135.10.

Continental Resources Inc. (NYSE: CLR) traded down about 0.9% at $66.13. The stock’s 52-week range is $50.13 to $80.91. Continental is the largest producer in the Bakken shale play and reported softer-than-expected results Wednesday morning.