Crude Oil Price Crumbles as Inventory Surges

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The U.S. Energy Information Administration (EIA) released its weekly petroleum status report Wednesday morning, showing that U.S. commercial crude inventories increased by 4.6 million barrels last week, maintaining a total U.S. commercial crude inventory of 472.8 million barrels. The commercial crude inventory remains in the upper half of the average range for this time of year.

Tuesday evening the American Petroleum Institute (API) reported that crude inventories rose by 1.4 million barrels in the week ending September 15. API also reported gasoline supplies fell by 5.1 million barrels and distillate inventories fell by 6.1 barrels. For the same period, analysts had consensus estimates for an increase of 2.9 million barrels in crude inventories, a decrease of 2 million barrels in gasoline inventories and a drop of 1.2 million barrels in distillate stockpiles.

Total gasoline inventories fell by 2.1 million barrels last week, according to the EIA, and have moved down into the upper half of the five-year average range. U.S. refineries produced about 9.8 million barrels of gasoline a day last week, up about 300,000 barrels compared to the prior week. Total motor gasoline supplied (the agency’s proxy for demand) averaged over 9.5 million barrels a day for the past four weeks, down by about 400,000 barrels a day compared with the prior week.

A new think tank called New Energy America is launching a website, according to a report at Axios, and the firm has already published its first study, a look at energy jobs in all 50 states, comparing fossil fuel jobs (coal, oil, natural gas) to clean energy jobs (wind, solar and others). In only nine states (Texas, Oklahoma and Louisiana among them) do jobs in the fossil fuel industries top the number of jobs in clean energy sectors.

Using data collected for the 2017 U.S. Department of Energy’s Energy and Employment Report, the study shows that in 2016, while 1.1 million people worked in coal, oil and gas, over 2.7 million people worked in clean energy.

In May of 2014, just a few months before crude oil prices began their collapse, fossil fuel industries employed about 2.1 million people, and one projection had that number rising to 3 million by the end of the decade.

Before the EIA report, benchmark West Texas Intermediate (WTI) crude for October delivery traded up about 1.5% at around $50.20 a barrel, and it traded at $50.10 shortly after the report’s release. Prices sank back below $50 a barrel within a few minutes. WTI settled at $49.48 on Tuesday and opened at $49.84 Wednesday morning. The 52-week range on October futures is $42.52 to $58.34.

Distillate inventories decreased by 5.2 million barrels last week and have moved to the lower half of the average range for this time of year. Distillate product supplied averaged over 4.1 million barrels a day over the past four weeks, up by 14.5% compared with the same period last year. Distillate production averaged about 4.5 million barrels a day last week, up about 500,000 barrels a day compared to the prior week’s production.

For the past week, crude imports averaged 7.4 million barrels a day, up by 888,000 barrels a day compared with the previous week. Refineries were running at 83.2% of capacity, with daily input averaging 15.2 million barrels a day, about 1.1 million barrels a day more than the previous week’s average. Analysts were looking for refinery usage of 83.7% for the week.

Crude oil exports rose to 928,000 barrels a day last week, up by 154,000 barrels over the prior week and 340,000 barrels more than at the same time last year. The cumulative daily average export total last week rose by 282,000 barrels a day, up from 482,000 barrels a day in the same week a year ago, an increase of 58.5%.

According to AAA, the current national average pump price per gallon of regular gasoline is $2.607, down nearly five cents from $2.656 a week ago and up about 27 cents per gallon compared with the month-ago price. Last year at this time, a gallon of regular gasoline cost $2.211 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 0.3%, at $80.48 in a 52-week range of $76.05 to $93.22. Over the past 12 months, Exxon stock has traded down about 2.8%.
  • Chevron Corp. (NYSE: CVX) traded up about 0.3%, at $116.65 in a 52-week range of $97.79 to $119.00. As of last night’s close, Chevron shares are trading up more than 15% over the past 12 months.
  • The United States Oil ETF (NYSEMKT: USO) traded up about 0.8%, at $10.19 in a 52-week range of $8.65 to $12.00.
  • The VanEck Vectors Oil Services ETF (NYSEMKT: OIH) traded up about 1.9%, at $25.02 in a 52-week range of $21.70 to $36.35.