The U.S. Energy Information Administration (EIA) released its weekly petroleum status report Wednesday morning. U.S. commercial crude inventories increased by 9.4 million barrels last week, maintaining a total U.S. commercial crude inventory of 532.5 million barrels. The commercial crude inventory stands at historically high levels for this time of year, according to the EIA.
Tuesday evening, the American Petroleum Institute (API) reported that crude inventories rose by 8.8 million barrels in the week ending March 18. For the same period, analysts had estimated an increase of 2.7 million barrels in crude inventories. API also reported gasoline supplies fell by 4.3 million barrels and distillate stockpiles fell by 391,000 barrels.
Total gasoline inventories decreased by 4.6 barrels last week, according to the EIA, yet remain well above the upper limit of the five-year average range. Total motor gasoline supplied (the agency’s measure of consumption) averaged about 9.4 million barrels a day for the past four weeks, up by 7% compared with the same period a year ago.
Benchmark West Texas Intermediate (WTI) crude oil reached a recent peak of $42.49 last Friday and has been trailing down since to settle about a dollar a barrel lower on Tuesday. The word has finally gotten around that the spike was very likely the result of short covering, not any fundamental change in supply and demand.
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Some investors are still hopeful that the planned meeting between members of OPEC and other oil-producing nations that has been scheduled for April 17 will have some impact on market fundamentals. Any impact will, at best, be tiny. Iran already has said it will not freeze or cut production. Libya has said the same thing.
Iranian production has risen by about 300,000 barrels a day since sanctions were lifted. An additional rise of the same size could be achieved by the third quarter. Iran’s goal is to win back the European customers it lost to Saudi Arabia, Iraq and Russia. And in a battle for market share, when everyone is selling virtually identical products, the main differentiator is price.
One more interesting item on the oil markets was reported by Reuters this morning. Venezuela’s state-controlled oil company, PdVSA, is scheduled to receive a shipment of U.S. crude oil at its Curaçao refinery next month. The company awarded a tender for 8 million barrels of U.S. and Nigerian crude to BP and China Oil, a subsidiary of China National Petroleum. Reuters said that Venezuela has been buying WTI since January and that it has received two cargoes of half a million barrels each so far with a third to arrive this week.
Before the EIA report, WTI crude for May delivery traded down about 2.3% at around $40.55 a barrel. WTI settled at $41.45 on Tuesday and fell to around $40.44 shortly after the report’s release. The 52-week range on WTI futures is $29.85 to $65.39.
Distillate inventories increased by 900,000 barrels last week and remain above the upper limit of the average range for this time of year. Distillate product supplied averaged about 3.6 million barrels a day over the past four weeks, down by 8% when compared with the same period last year. Distillate production averaged over 4.7 million barrels a day last week, down by about 100,000 barrels a day from the prior week.
For the past week, crude imports averaged 8.4 million barrels a day, up by 691,000 barrels a day compared with the previous week. Refineries were running at 88.4% of capacity, with daily input averaging over 15.8 million barrels, about 176,000 barrels a day below the previous week’s average.
According to AAA, the current national average pump price per gallon of regular gasoline is $1.993, up about 1.9% from $1.956 a week ago and up 29 cents compared with the month-ago price. Last year at this time, a gallon of regular gasoline cost $2.424 on average in the United States.
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Here is a look at how share prices for two blue chip stocks and two exchange traded funds reacted to this latest report.
Exxon Mobil Corp. (NYSE: XOM) traded down about 0.2%, at $83.93 in a 52-week range of $66.55 to $90.09. Over the past 12 months, Exxon stock traded down about 1.8% and is down about 18.5% since August 2014, as of Tuesday’s close.
Chevron Corp. (NYSE: CVX) traded down about 2.1%, at $93.43 in a 52-week range of $69.58 to $112.20. As of Tuesday’s close, Chevron shares have dropped about 11.6% over the past 12 months and trade down about 28.5% since August 2014.
The United States Oil ETF (NYSEMKT: USO) traded down about 3%, at $10.23 in a 52-week range of $7.67 to $21.50.
The Market Vectors Oil Services ETF (NYSEMKT: OIH) traded down about 1.8% at $26.47, in a 52-week range of $20.46 to $39.80.
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