Crude Oil Inches Up on Inventory Report, Improved Compliance on OPEC Cuts

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The U.S. Energy Information Administration (EIA) released its weekly petroleum status report Wednesday morning. U.S. commercial crude inventories increased by 1.5 million barrels last week, maintaining a total U.S. commercial crude inventory of 520.2 million barrels, the highest level since the EIA began keeping records in 1982. The commercial crude inventory remained above the upper limit of the average range for this time of year.

Tuesday evening the American Petroleum Institute (API) reported that crude inventories rose by 2.5 million barrels in the week ending February 24. API also reported gasoline supplies increased by 1.8 million barrels and distillate inventories decreased by 3.7 million barrels. For the same period, analysts had estimated an increase of 2.9 million barrels in crude inventories, a decline of 2 million barrels in gasoline inventories and a drop of 920,000 barrels in distillate stockpiles.

Total gasoline inventories decreased by 500,000 barrels last week, according to the EIA, and moved 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 6.2% compared with the same period a year ago.

An early report from Reuters on OPEC February crude oil production indicates an increase in compliance with the cartel’s quotas from 90% in January to 94%. Larger cuts in Saudi Arabia and Angola helped offset production increases in Libya and Iran.

However, January import data from China, India and Japan show actual increases. China, for example, saw imports rise 27.5% year over year in January to just over 8 million barrels a day, of which 1.18 million barrels a day were supplied by Saudi Arabia, up 40% year over year for the month.

The catch is not in how much crude the Saudis produce, but how much the country exports. The source of exports is not limited to current production, but also includes amounts removed from storage. We warned about this possibility in December and now Reuters is on the case as well. There’s no way to be absolutely certain the increased quantities are coming from storage, but they have to be coming from someplace, no?

Before the EIA report, benchmark West Texas Intermediate (WTI) crude for April delivery traded up about 0.5% at around $54.28 a barrel and rose to $54.35 shortly after the report’s release. WTI crude settled at $54.01 on Tuesday. The 52-week range on April futures is $40.97 to $56.92.

Distillate inventories fell by 900,000 barrels last week but remain above the upper limit of the average range for this time of year. Distillate product supplied averaged about 4 million barrels a day over the past four weeks, up 15.7% compared with the same period last year. Distillate production averaged 4.8 million barrels a day last week, up by 300,000 barrels a day compared with the prior week’s production.

For the past week, crude imports averaged 7.6 million barrels a day, up by about 303,000 barrels a day compared with the previous week. Refineries were running at 86% of capacity, with daily input averaging 15.7 million barrels, about 393,000 barrels a day more than the previous week’s average.

According to AAA, the current national average pump price per gallon of regular gasoline is $2.30, up from $2.285 a week ago and up about 1.2 cents compared with the month-ago price. Last year at this time, a gallon of regular gasoline cost $1.759 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 1%, at $81.72 in a 52-week range of $80.31 to $95.55. Over the past 12 months, Exxon stock has traded up about 0.6% and is down about 18% since August 2014, as of Wednesday’s close.

Chevron Corp. (NYSE: CVX) traded up about 0.7%, at $113.24 in a 52-week range of $84.40 to $119.00. As of last night’s close, Chevron shares have added more than 29% over the past 12 months and trade down more than 13% since August 2014.

The United States Oil ETF (NYSEMKT: USO) traded up about 0.3%, at $11.48 in a 52-week range of $8.94 to $12.45.

The VanEck Vectors Oil Services ETF (NYSEMKT: OIH) traded up about 1.8% to $32.70, in a 52-week range of $24.20 to $36.35.