Crude Oil Supplies Drop Unexpectedly

The U.S. Energy Information Administration (EIA) released its weekly petroleum status report this morning. U.S. commercial crude inventories fell by 2.45 million barrels last week, bringing the total U.S. commercial crude inventory to 365.2 million barrels, above the upper limit of the five-year range for this time of the year.

Total gasoline inventories decreased by 500,000 barrels last week and remain in the lower half of the five-year average range. Total motor gasoline supplied averaged 8.8 million barrels a day over the past four weeks — a drop of 1% compared with the same period a year ago.

The Dow-Jones estimates called for a weekly crude inventory rise of 1.1 million barrels. Gasoline inventories were expected to rise by 200,000 barrels. Crude prices, which had fallen below $90 a barrel before the report was released, have risen slightly following the crude inventory drop but remain down about 1.5% for the day.

For the past week, crude imports averaged 7.6 million barrels a day, a decrease of 2.3 million barrels a day from the previous week. Refineries were running at 87.4% of capacity, with daily input of 14.6 million barrels a day, 292,000 barrels a day lower than the previous week.

Distillate inventories, which include diesel fuel, fell by 500,000 barrels last week and are in the lower half of the average range. Distillate product supplied averaged 3.5 million barrels a day over the past four weeks, down 8.7% when compared with the same period last year. Distillate production totaled 4.6 million barrels a day last week, the same as the prior week.

Refinery utilization fell from around 89% in the week ending September 14 to around 87% last week. It’s possible that refiners are holding off a little to see if crude prices fall a bit more. Also, we are near the end of a fiscal quarter and the refiners could be paring costs as they prepare to report quarterly earnings.

The United States Oil ETF (NYSEMKT: USO) is down 1.9% at $33.12 in a 52-week range of $29.02 to $42.30.

The United States Gasoline ETF (NYSEMKT: UGA) is up 0.4% at $58.93. The 52-week range is $44.65 to $61.95.

Paul Ausick