U.S. crude futures gained $1.23, or 2.5%, to settle at $51.17 a barrel on Wednesday after a data report showed a decrease in gasoline and distillate supplies, which more than offset the impact of a larger-than-expected rise in oil inventories.
However, the commodity continues to remain under pressure from fears that the coronavirus outbreak in China would have a severe impact on oil demand. Only last week, crude collapsed into a bear market, having plunged more than 20% from its 52-week high of $63.27 on Jan 6. In fact, the health scare, which has killed over 1,300 people so far and infected nearly 60,000, was enough to send oil prices sliding below the psychologically important $50-a-barrel for the first time in more than a year.
While it is quite difficult at this stage to assess the possible implications of the deadly virus on oil demand, below we review the EIA's Weekly Petroleum Status Report for the week ending Feb 7.
Crude Oil: The federal government’s EIA report revealed that crude inventories rose by 7.5 million barrels, compared to the 2.3 million barrels increase that energy analysts had expected. A sharp fall in exports and jump in imports largely drove the larger-than-anticipated stockpile build with the world's biggest oil consumer even as refinery activity edged up. This puts the total domestic stocks at 442.5 million barrels – 1.8% below the year-ago figure and 2% lower than the five-year average.
The latest report also showed that supplies at the Cushing terminal in Oklahoma (the key delivery hub for U.S. crude futures traded on the New York Mercantile Exchange) was up 1.7 million barrels to 38.4 million barrels.
The crude supply cover was up from 26.5 days in the previous week to 27.3 days. In the year-ago period, the supply cover was 27.4 days.
Turning to products, and it is a fairly bullish story.
Gasoline: Gasoline supplies tallied a second straight drop after increasing for 12 weeks. The fuel’s small decline (95,000 barrels to be precise) is attributable to lower production. Analysts had forecast 700,000 barrels climb. At 261 million barrels, the current stock of the most widely used petroleum product is 1% above the year-earlier level and exceeds the five-year average range by 3%.
Distillate: Distillate fuel supplies (including diesel and heating oil) were down for a fourth consecutive week. The 2 million barrels decrease could be attributed to dip in production and imports. Meanwhile, the market had been looking for a supply draw of 900,000 barrels. Current supplies – at 141.2 million barrels – are just 0.7% higher than the year-ago level but remain 5% below the five-year average.
Refinery Rates: Refinery utilization was up by 0.6% from the prior week to 88%.
About the Weekly Petroleum Status Report
The Energy Information Administration (EIA) Petroleum Status Report, containing data of the previous week ending Friday, outlines information regarding the weekly change in petroleum inventories held and produced by the U.S., both locally and abroad.
The report provides an overview of the level of reserves and their movements, thereby helping investors understand the demand/supply dynamics of petroleum products. It is an indicator of current oil prices and volatility that affect the businesses of the companies engaged in the oil and refining industry.
The data from EIA generally acts as a catalyst for crude prices and affect producers, such as ExxonMobil XOM, Royal Dutch Shell RDS.A and ConocoPhillips COP and refiners such as Valero Energy VLO and Marathon Petroleum MPC.
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Exxon Mobil Corporation (XOM) : Free Stock Analysis Report
Valero Energy Corporation (VLO) : Free Stock Analysis Report
Chevron Corporation (CVX) : Free Stock Analysis Report
ConocoPhillips (COP) : Free Stock Analysis Report
Royal Dutch Shell PLC (RDS.A) : Free Stock Analysis Report
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