Crude Oil Inventory Jumps, Pushes Price Even Lower

Total gasoline inventories increased by 2 million barrels last week and remain above the upper limit of the five-year average range. Total motor gasoline supplied (the EIA’s measure of consumption) averaged over 8.6 million barrels a day for the past four weeks, up by 3.5% compared with the same period a year ago.

Distillate inventories decreased by 3.3 million barrels last week and have moved into the lower half of the average range. Distillate product supplied averaged 4.3 million barrels a day over the past four weeks, up by 7.3% when compared with the same period last year. Distillate production averaged 4.7 million barrels a day last week, about the same as the prior week’s production.

Tuesday evening the American Petroleum Institute (API) reported that crude inventories rose by 1.6 million barrels, gasoline stockpiles had also risen by 1.6 million barrels and distillate stocks rose by 500,000 barrels in the week ending February 6. For the same period, analysts had estimated an increase of 3.4 million barrels in crude inventories, a drop of 250,000 barrels in gasoline stockpiles and a decline of 1.3 million barrels in distillate inventories.

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Before the EIA report, West Texas Intermediate (WTI) crude for March delivery was trading down about 2.3% at around $49.85 a barrel Wednesday morning. The WTI price fell further to around $48.20 (down about 3.7% for the day) immediately after the report was released. The 52-week range on WTI futures is $43.58 to $100.52.

For the past week, crude imports averaged 7.3 million barrels a day, down by 101,000 barrels a day compared with the previous week. Refineries were running at 90% of capacity, with daily input of more than 15.6 million barrels, about 20,000 barrels a day above the previous week’s average.

Crude prices have risen sharply in the past 10 trading days, but from recent highs over $54 a barrel have pulled back in the past couple of trading sessions. The price increases were a result of both short covering and steep drops in the number of rigs working in the United States. The United Steelworkers Union strike at several large refineries has so far had little impact on refining throughput.

According to AAA, the current national average pump price per gallon of regular gasoline is $2.213, up from $2.111 a week ago and from $2.139 a month ago. Last year a gallon of regular cost $3.307 on average in the United States. Pump prices rose more than a dime in the past week, but if this latest report influences traders at all, the higher than expected inventory increase should keep increases moderate for the next several days.

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Here is a look at how share prices for two exchange traded funds reacting to this latest report.

The United States Oil ETF (NYSEMKT: USO) traded down about 3.9%, at $18.22 in a 52-week range of $16.30 to $39.44.

The Market Vectors Oil Services ETF (NYSEMKT: OIH) also traded down, about 2% to $34.70, in a 52-week range of $31.63 to $58.01.