Crude Oil Prices Fall on Smaller-Than-Expected Inventory Decline

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The U.S. Energy Information Administration (EIA) released its weekly petroleum status report Wednesday morning. U.S. commercial crude inventories decreased by 900,000 barrels last week, maintaining a total U.S. commercial crude inventory of 527.8 million barrels. The commercial crude inventory remains near the upper limit of the average range for this time of year.

Tuesday evening the American Petroleum Institute (API) reported that crude inventories fell by 4.16 million barrels in the week ending April 28. API also reported gasoline supplies decreased by 1.93 million barrels and distillate inventories decreased by 440,000 barrels. For the same period, an S&P Global Platts survey of analysts had consensus estimates for a decrease of 2.25 million barrels in crude inventories, an increase of 500,000 barrels in gasoline inventories and a rise of 900,000 barrels in distillate stockpiles.

Total gasoline inventories increased by 200,000 barrels last week, according to the EIA, and remain near the upper limit of the five-year average range. Total motor gasoline supplied (the agency’s measure of consumption) averaged over 9.2 million barrels a day for the past four weeks, down by 2.7% compared with the same period a year ago.

Platts oil futures editor Geoffrey Craig said:

Seasonal crude draws typically begin in May, but refinery activity has been running sharply above levels usually seen for this time of year, pulling barrels from storage.

U.S. refineries processed a record 17.285 million b/d [barrels per day] in the week that ended April 21, raising the utilization rate by 1.2 percentage points to 94.1% of capacity. By comparison, the run rate stood at just 88.1% a year earlier.

Analysts expect U.S. refiners to have dialed down the refinery run rate by 0.1 percentage point to 94% in the week that ended Friday, following a large increase in the prior week. If confirmed, that would still far exceed the rate of 89.7% from the year-ago period.

U.S. crude oil runs usually rise in March as facilities start returning from winter maintenance, stabilize in April, then pick up again in May before peaking in July as the summer driving season is fully underway.

For crude runs to hit an all-time high in the spring raises the possibility that the additional supply of products will overwhelm demand and cause refiners to eventually back off.

Before the EIA report, benchmark West Texas Intermediate (WTI) crude for June delivery traded up about 0.6% at around $47.90 a barrel and slipped to $47.38 shortly after the report’s release. WTI crude settled at $47.66 on Tuesday. The 52-week range on June futures is $44.56 to $57.95.

Distillate inventories fell by 600,000 barrels last week and remain in the upper half of the average range for this time of year. Distillate product supplied averaged 4.2 million barrels a day over the past four weeks, up 3.3% compared with the same period last year. Distillate production averaged about 5.1 million barrels a day last week, unchanged compared with the prior week’s production.

For the past week, crude imports averaged over 8.3 million barrels a day, down by about 648,000 barrels a day compared with the previous week. Refineries were running at 93.3% of capacity, with daily input averaging 17.2 million barrels a day, about 108,000 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 $2.372, down nearly four cents from $2.408 a week ago and up less than five cents per gallon compared with the month-ago price. Last year at this time, a gallon of regular gasoline cost $2.221 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 0.5%, at $82.45 in a 52-week range of $80.30 to $95.55. Over the past 12 months, Exxon stock has traded down about 7.2% and is down about 20.5% since August 2014, as of Tuesday’s close.

Chevron Corp. (NYSE: CVX) traded up about 0.4%, at $105.82 in a 52-week range of $97.53 to $119.00. As of last night’s close, Chevron shares have added about 3.1% over the past 12 months and trade down about 21% since August 2014.

The United States Oil ETF (NYSEMKT: USO) traded down about 0.4%, at $9.88 in a 52-week range of $9.23 to $12.45.

The VanEck Vectors Oil Services ETF (NYSEMKT: OIH) traded down about 0.2%, at $27.25 in a 52-week range of $26.10 to $36.35.