Crude Oil Price Remains Flat, Waiting for January Cuts to Start

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The U.S. Energy Information Administration (EIA) released its weekly petroleum status report Thursday morning, one day later than usual due to the Christmas holiday. U.S. commercial crude inventories increased by 600,000 barrels last week, maintaining a total U.S. commercial crude inventory of 486.1 million barrels. The commercial crude inventory is now near the upper limit of the average range for this time of year.

Wednesday evening the American Petroleum Institute (API) reported that crude inventories rose by 4.2 million barrels in the week ending December 23. API also reported gasoline supplies decreased by 2.8 million barrels and distillate inventories fell by 1.7 million barrels. For the same period, analysts had estimated a decrease of 2 million barrels in crude inventories, a rise of 1.3 million barrels in gasoline stockpiles, and an increase of 1.8 million barrels in distillates.

Total gasoline inventories decreased by 1.6 million barrels last week, according to the EIA, and have now moved into the upper half of the five-year average range. Total motor gasoline supplied (the agency’s measure of consumption) averaged over 9 million barrels a day for the past four weeks, down by 2.8% compared with the same period a year ago.

Benchmark West Texas Intermediate (WTI) crude has gained about $8 a barrel since the end of November as a result of promised production cuts of around 1.8 million barrels a day from OPEC members and other producing nations, including Russia. The cutbacks go into effect in January, and by the end of the month we’ll know whether the cuts actually have occurred.

The cartel’s history of living up to its production agreements is hardly conducive to positive expectations for this one. But, as they say, this time is different. Traders think that is because it is clearly in producers’ best interest to cut production in order to drain the glut of oil in storage and on the market. But what is in the group’s best interest is not always the same is what is in an individual nation’s best interest, and when push comes to shove, national interests have always prevailed before.

Before the EIA report, WTI crude for February delivery traded up about 0.1% at around $54.10 a barrel and slipped to $54.04 after the report’s release. WTI crude settled at $54.06 on Wednesday. The 52-week range on February futures is $35.10 to $55.44.

Distillate inventories decreased by 1.9 million barrels last week but remain near 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 12.7% compared with the same period last year. Distillate production averaged about 5 million barrels a day last week, down about 100,000 barrels compared with the prior week’s production.

For the past week, crude imports averaged about 8.2 million barrels a day, down by about 304,000 barrels a day compared with the previous week. Refineries were running at 91% of capacity, with daily input averaging about 16.6 million barrels, about 101,000 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 $2.303, up from $2.260 a week ago and up nearly 17 cents compared with the month-ago price. Last year at this time, a gallon of regular gasoline cost $2.001 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 0.2%, at $90.46 in a 52-week range of $71.55 to $95.55. Over the past 12 months, Exxon stock has traded up about 14% and is down about 12.5% since August 2014, as of Wednesday’s close.

Chevron Corp. (NYSE: CVX) traded up less than 0.1%, at $117.98 in a 52-week range of $75.33 to $119.00. As of last night’s close, Chevron shares have added about 28% over the past 12 months and also trade down about 11.7% since August 2014.

The United States Oil ETF (NYSEMKT: USO) traded down about 0.2%, at $11.73 in a 52-week range of $7.67 to $12.45.

The VanEck Vectors Oil Services ETF (NYSEMKT: OIH) traded down 0.4% at $33.31, in a 52-week range of $20.46 to $36.35.