Another Increase in Crude Inventories (CVX, XOM, OIL, USO, CIT)

The US Department of Energy’s Energy Information Administration has released its weekly status report on crude oil inventories, and once again they are higher, this time by 2.8 million barrels. Gasoline inventories are down 1.6 million barrels and distillate inventories are up by 300,000 barrels. All these figures put respective inventories above the upper bound of the five-year average for oil, gasoline, and diesel fuel.

It’s no surprise then that share prices for the petroleum companies are falling in the wake of the report.  Chevron Corporation (CVX), which announced the retirement of chairman and CEO David O’Reilly and his replacement by vice-chairman John Watson, is trading down, as is Exxon Mobil Corp. (XOM). For some unknown reason, the iPath S&P GSCI Crude Oil Total Return Index ETN (OIL), and the US Oil Fund ETF (USO) are both up about 1%.

Crude oil futures are off a bit and so are natural gas futures at the Henry Hub. Refiners’ shares are also off, as the EIA reported refinery utilization of 84.6%, down from 85.6% last week and down from 87.2% since the beginning of September.

Combined with a drop in the Chicago Purchasing Managers Index to 46.1, where an increase to 52 had been expected; a weak unemployment report from ADP; and the impending demise of CIT Group, Inc. (CIT), the major indexes are all off by about 1%.

What’s surprising is that given all the lukewarm-to-bad news, the market hasn’t fallen further. Crude prices are up more than 2% so far today, at better than $68/barrel and gold is also climbing to near $1,000/oz. again. The whole picture looks as if traders are racing around trying to find profits and throwing a bit of money here and another bit there and waiting to see if anything sticks. To add to the mix, the 10-year Treasury bond is also up very slightly to 3.296%.

Chevron shares are off about 0.8%, to $70.32, and Exxon is off about 0.7% to $68.59. The OIL ETN is up nearly 2.5% and the USO ETF has gained about 2.2%.