Crude Oil Prices Cut Losses on Smaller Inventory Growth

Energy

Published: April 20, 2016 11:10 am

Last Updated: January 13, 2020 10:33 am

The U.S. Energy Information Administration (EIA) released its weekly petroleum status report Wednesday morning. U.S. commercial crude inventories increased by 2.1 million barrels last week, maintaining a total U.S. commercial crude inventory of 538.6 million barrels. The commercial crude inventory remains 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 3.1 million barrels in the week ending April 8. For the same period, analysts had estimated an increase of 2 million barrels in crude inventories. API also reported gasoline supplies fell by a million barrels and distillate stockpiles fell by 2.5 million barrels.

Total gasoline inventories decreased by 100,000 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 9.4 million barrels a day for the past four weeks, up by 3.9% compared with the same period a year ago.

The EIA on Tuesday published a brief report on the impact of Gulf of Mexico crude oil production on total U.S. production. Onshore production is forecast to fall from 7.41 million barrels a day in 2015 to 6.46 million barrels a day in 2016 and to 5.76 million barrels a day in 2017.

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Federal Gulf of Mexico production, however, is slated to rise from 1.54 million barrels a day in 2015 to 1.66 million barrels in 2016 and 1.82 million barrels in 2017. Total production is forecast to fall from 9.43 million barrels a day last year to 8.04 million barrels a day by 2017, even with the increase from the Gulf. Production from Alaska is expected to drop by 200,000 barrels a day as well over the two-year period.

Analysts at industry research firm Wood Mackenzie said in a note on Monday that even if the Doha meeting had produced a freeze on output “it would not have been a genuine one in 2016.” The analysts did make the following prediction though:

In the second half of 2016, we expect to see little global supply growth and an implied stock draw in Q4 which will help support oil prices at year-end.

Before the EIA report, benchmark West Texas Intermediate (WTI) crude for May delivery traded down about 2.1% at around $40.10 a barrel. The May contract expires Wednesday and the June contract becomes the prompt month contract. WTI for June delivery traded around $41.60 Wednesday morning. WTI for May delivery settled at $41.08 on Tuesday and rose to around $40.66 shortly after the report’s release. The 52-week range on WTI May futures is $29.85 to $65.39.

Distillate inventories decreased by 3.6 million barrels last week but remain well above the upper limit of the average range for this time of year. Distillate product supplied averaged about 3.9 million barrels a day over the past four weeks, down by 0.7% when compared with the same period last year. Distillate production averaged over 4.7 million barrels a day last week, down by less than 100,000 barrels a day from the prior week.

For the past week, crude imports averaged 8.2 million barrels a day, up by 247,000 barrels a day compared with the previous week. Refineries were running at 89.4% of capacity, with daily input averaging 16.1 million barrels, about 163,000 barrels a day above the previous week’s average.

According to AAA, the current national average pump price per gallon of regular gasoline is $2.107, up from $2.081 a week ago and up about 12 cents compared with the month-ago price. Last year at this time, a gallon of regular gasoline cost $2.457 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 up about 0.6%, at $86.71 in a 52-week range of $66.55 to $90.09. Over the past 12 months, Exxon stock has traded down about 1.2%, and it is down about 16.5% since August 2014, as of Tuesday’s close.

Chevron Corp. (NYSE: CVX) traded down less than 0.1%, at $100.45 in a 52-week range of $69.58 to $112.20. As of Tuesday’s close, Chevron shares have dropped about 8.9% over the past 12 months and trade down nearly 24.8% since August 2014.

The United States Oil ETF (NYSEMKT: USO) traded down about 1.2%, at $10.32 in a 52-week range of $7.67 to $21.50.

The Market Vectors Oil Services ETF (NYSEMKT: OIH) traded down about 0.3% to $28.69, in a 52-week range of $20.46 to $39.80.

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