Energy

Crude Oil Price Narrows Daily Loss After Inventory Report

Paul Ausick

Published: June 2, 2016 11:35 am

Last Updated: January 13, 2020 7:16 am

The U.S. Energy Information Administration (EIA) released its weekly petroleum status report Thursday morning. U.S. commercial crude inventories decreased by 1.4 million barrels last week, maintaining a total U.S. commercial crude inventory of 535.7 million barrels. The commercial crude inventory remains at historically high levels for this time of year, according to the EIA.

Wednesday evening the American Petroleum Institute (API) reported that crude inventories rose by 2.4 million barrels in the week ending May 27. API also reported gasoline supplies fell by 1.5 million barrels and distillate stockpiles fell by 1.5 million barrels. For the same period, analysts had estimated a decrease of around 2.5 million barrels in crude inventories, along with a decline of 200,000 barrels in gasoline supplies and a 900,000-barrel decline in distillates.

Total gasoline inventories decreased by 1.5 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 9.7 million barrels a day for the past four weeks, up by 4% compared with the same period a year ago.

The OPEC ministers meeting in Vienna ended Thursday morning without any agreement among members for a production ceiling. Iran typically gets the blame for this, but the Saudis are not interested in setting either a ceiling or a freeze on production. The cartel’s efforts to drive high-cost U.S. shale producers out finally began paying dividends earlier this year, and trimming production now junks a strategy that has worked.

It’s also fair to say that the Saudi strategy has had some help over the past few weeks from a massive fire in the oil sands region of Alberta, Canada, and political interruptions of exports from Nigeria and, until recently, Libya.

Before the EIA report, benchmark West Texas Intermediate (WTI) crude for July delivery traded down about 1.4% at around $48.32 a barrel and rose to around $48.68 shortly after the report’s release. WTI crude settled at $49.01 on Wednesday. The 52-week range on July futures is $31.61 to $63.77.

Distillate inventories decreased by 1.3 million barrels last week and also remain well above the upper limit of the average range for this time of year. Distillate product supplied averaged about 4.1 million barrels a day over the past four weeks, up by 0.6% when compared with the same period last year. Distillate production averaged about 4.8 million barrels a day last week, up about 100,000 barrels a day from the prior week.

For the past week, crude imports averaged over 7.8 million barrels a day, up about 524,000 barrels a day compared with the previous week. Refineries were running at 89.8% of capacity, with daily input averaging 16.2 million barrels, about 73,000 barrels a day less than the previous week’s average.

According to AAA, the current national average pump price per gallon of regular gasoline is $2.327, up from $2.313 a week ago and up 11 cents compared with the month-ago price. Last year at this time, a gallon of regular gasoline cost $2.75 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 1.5%, at $87.90 in a 52-week range of $66.55 to $90.46. Over the past 12 months, Exxon stock has traded up about 3.3% and is down about 14.8% since August 2014, as of Wednesday’s close. Exxon shares were downgraded from Buy to Neutral at Merrill Lynch Thursday morning.

Chevron Corp. (NYSE: CVX) traded down about 1%, at $100.05 in a 52-week range of $69.58 to $104.26. As of Wednesday’s close, Chevron shares have dropped about 2.4% over the past 12 months and trade down about 25% since August 2014.

The United States Oil ETF (NYSEMKT: USO) traded down about 1.1%, at $11.81 in a 52-week range of $7.67 to $20.80.

The Market Vectors Oil Services ETF (NYSEMKT: OIH) traded down about 1.1% to $27.54, in a 52-week range of $20.46 to $38.00.