Crude Oil Stockpile Jumps, Price Follows

The U.S. Energy Information Administration (EIA) released its weekly petroleum status report Wednesday morning. U.S. commercial crude inventories increased by 8.4 million barrels last week, maintaining a total U.S. commercial crude inventory of 494.9 million barrels. The commercial crude inventory remains near levels not seen at this time of year in at least the past 80 years.

Tuesday evening the American Petroleum Institute (API) reported that crude inventories rose by 11.4 million barrels in the week ending January 22. For the same period, analysts had estimated an increase of 3.3 million barrels in crude inventories.

Total gasoline inventories increased by 3.5 million barrels last week, according to the EIA, and remain well above the upper limit of the five-year average range. Total motor gasoline supplied (the agency’s measure of consumption) averaged 8.7 million barrels a day for the past four weeks, down by 2.5% compared with the same period a year ago.

Benchmark West Texas Intermediate (WTI) crude oil traded higher by more than 9% last week, closing at $32.19 a barrel on Friday. In early morning trading Wednesday, the price fell to a low of $30.14, down about 6.4%. After last week’s EIA report on Thursday (delayed one day due to the Martin Luther King Jr. holiday observance), prices dipped to their 52-week low below $28 a barrel.
[recirclink id=311198]
Before the EIA report, WTI crude for March delivery traded down about 2% at around $30.80 a barrel. WTI settled at $31.45 on Tuesday and bounced to around $30.90 shortly after the report’s release. The 52-week range on WTI futures is $27.56 to $65.69.

WTI prices fell Wednesday morning, following the massive build reported by the API. When the EIA number came in lower, the price rose. This is volatility talking, not fundamentals. Consider refinery runs, as we do later in this report.

Distillate inventories decreased by 4.1 million barrels last week but remain near the upper limit of the average range for this time of year. Distillate product supplied averaged 3.4 million barrels a day over the past four weeks, down by 14.8% when compared with the same period last year. Distillate production averaged about 4.5 million barrels a day last week.

For the past week, crude imports averaged 7.6 million barrels a day, down about 170,000 barrels a day compared with the previous week. Refineries were running at 87.4% of capacity, with daily input of averaging over 15.6 million barrels, about 551,000 barrels a day below the previous week’s average.

Refining runs have fallen below 90% well ahead of the normal time for this to occur. Late February is the typical slow period in refined product production due to scheduled maintenance and turnaround to summer-grade fuel. Pump prices usually rise as well. But the early refining slowdown is not accompanied by higher prices because this time is different: supply continues to build while demand slackens.

According to AAA, the current national average pump price per gallon of regular gasoline is $1.828, down about 2.2% from $1.87 a week ago and from $2.00 a month ago. Last year at this time, a gallon of regular gasoline cost $2.038 on average in the United States.

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 0.4%, at $76.39 in a 52-week range of $66.55 to $93.45. Over the past 12 months, Exxon stock traded down about 16% and is down about 21% since early November of 2014, as of Tuesday’s close.

Chevron Corp. (NYSE: CVX) traded up about 0.2%, at $84.29 in a 52-week range of $69.58 to $112.93. As of Tuesday’s close, Chevron shares have dropped about 22% over the past 12 months and trade down about 30% since early November 2014.

The United States Oil ETF (NYSEMKT: USO) traded up about 1.6%, at $9.11 in a 52-week range of $7.92 to $21.50.

The Market Vectors Oil Services ETF (NYSEMKT: OIH) traded up about 1.6% at $22.58, in a 52-week range of $20.46 to $39.80.